Can domestic research and experimental costs be deducted right away again under section 174A?

Yes. For amounts paid or incurred in taxable years beginning after December 31, 2024, new IRC §174A allows domestic research or experimental expenditures to be deducted in the year paid or incurred. Foreign research costs still have to be amortized over 15 years under IRC §174.

Sources checked October 14, 2026. Current through October 13, 2026.

The current rule

Section 70302 of the One Big Beautiful Bill Act added IRC §174A. For amounts paid or incurred in taxable years beginning after December 31, 2024:

Domestic research or experimental expenditures are deductible in the year paid or incurred, notwithstanding IRC §263 (IRC §174A(a)).
Optional amortization: A taxpayer can instead elect to capitalize domestic R&E and amortize it ratably over a period of at least 60 months it chooses, starting with the month it first realizes benefits from the spending (IRC §174A(c)).
Foreign research (as defined in IRC §41(d)(4)(F)) is still capitalized and amortized over 15 years, starting from the midpoint of the year paid or incurred (IRC §174).

Domestic R&E capitalized in 2022 to 2024

For taxable years beginning in 2022 through 2024, domestic R&E had to be charged to capital account under the TCJA version of IRC §174. Rev. Proc. 2025-28 describes two transition rules in OBBBA §70302(f):

Faster write-off of the remaining balance: For domestic R&E paid or incurred in taxable years beginning after December 31, 2021 and before January 1, 2025, a taxpayer may elect to deduct the remaining unamortized amount in full in the first taxable year beginning after December 31, 2024, or ratably over the 2-year period starting with that year (OBBBA §70302(f)(2)).
Small business retroactive election: An "eligible taxpayer" that met the IRC §448(c) gross receipts test for its first taxable year beginning after December 31, 2024 could elect to apply §174A back to taxable years beginning after December 31, 2021, generally by amending each affected return (OBBBA §70302(f)(1)). Tax shelters barred from the cash method under IRC §448(a)(3) are excluded.

The small business deadline has passed

The retroactive election had to be made within one year of enactment. Because July 4, 2026 fell on a Saturday, Rev. Proc. 2025-28 says the deadline was Monday, July 6, 2026. A small business that missed it can still use the faster write-off of its remaining 2022 to 2024 balance described above.

Sources

IRC §174A: Domestic research or experimental expenditures
IRC §174(a): Amortization of foreign research or experimental expenditures
Rev. Proc. 2025-28: Guidance on OBBBA §70302 transition rules (2025-38 IRB)

Not tax advice. Check the sources against your client's facts before relying on this.