R&D Credits and Section 174: How the Big Beautiful Bill Impacts Amended Returns

The “Big Beautiful Bill” was signed into law by President Trump on July 4, 2025. This bill contains numerous tax provisions, including those relevant to taxpayers wishing to amend their 2022 through 2024 returns. These provisions may be used to claim an R&D Tax Credit, bring up-to-date with IRC Section 174 compliance in years they may have previously skipped, or deduct their Section 174 expenses.

Who Can Amend Returns?

Who can amend their returns to take advantage of these provisions? In short, anyone can. However, there are different treatments for those classified as “certain small businesses.” This designation follows IRC Section 448(c), requiring an average gross receipts of less than $31 million for tax years 2022 through 2024.

If a taxpayer meets this requirement, the effective date for the amendments related to Section 174 amortization and the Section 280C reduced credit election is changed to tax years beginning after December 31, 2021, instead of December 31, 2024.

Special Rules for “Certain Small Businesses”

If your client qualifies as a “certain small business”:

• They can elect to deduct Section 174 expenses immediately on amended returns for 2022 through 2024.
• This election must apply to all applicable years—they cannot selectively apply it to individual years.
• The amendment window closes July 4, 2026 (one year from the bill’s signing).

This option may especially benefit taxpayers who faced higher tax burdens due to Section 174 but lack the liability to fully absorb a 2025–2026 catch-up deduction.

280C Election Opportunities

Taxpayers also have the opportunity to make a retroactive Section 280C election. The “Big Beautiful Bill” reverts Section 280C to the pre-Tax Cuts and Jobs Act (TCJA) language. This means that if the election is not made, the taxpayer must reduce the deduction by the amount of the gross Federal R&D Tax Credit. The Section 280C election is normally not offered retroactively and must be made on an originally filed return. The opportunity for taxpayers to take advantage of this provision exists as long as the election is made prior to July 4, 2026.

What About Larger Taxpayers?

Taxpayers who do not meet the criteria of a “certain small business” criteria still have planning options:

• They can amend their 2022-2024 returns to claim the R&D credit and amortize Section 174 expenses as required.
• A catch-up adjustment may be taken fully in tax year 2025 or spread over 2025 and 2026.
• Taxpayers who improperly deducted their full Section 174 expenses in tax years 2022 through 2024 may also need to file a Form 3115, an Application for Change in Accounting Method, with a $0 §481(a) adjustment, unless they qualify as a small business.

There are opportunities for all taxpayers to take advantage of the “Big Beautiful Bill” on amended returns from tax years 2022-2024. To identify the best course of action, determine whether a taxpayer meets the criteria of a “certain small business”, and if so, analyze the impacts of deducting Section 174 expenses in the year incurred as opposed to making the catch-up deduction available to all taxpayers.

If you’re evaluating amended return strategies or need support navigating Section 174 and R&D changes under the “Big Beautiful Bill,” contact our R&D Tax Credit Services team for guidance.