How to Claim Missed R&D Tax Credits and Get Refunds in 2025

If your business has never claimed the Research and Development (R&D) Tax Credit, you are not alone. Many startups and growth-stage companies either skipped the credit or missed out on the full value because of outdated tax strategies, missed documentation, or confusion around Section 174.

The good news? Thanks to the One Big Beautiful Bill Act (OBBBA), passed in 2025, it is now easier to fix past filings, claim missed credits, and even recover cash refunds for previous tax years.

Here is how it works.

Why R&D Credits Still Matter

The R&D Tax Credit is one of the most valuable government incentives available to businesses investing in product development, engineering, or software. Even if your company is not profitable, the credit can be used to offset payroll taxes or result in an income tax refund.

If you have been building and innovating, there is a strong chance you are eligible.

New R&D Expensing Rules Under OBBBA

Before 2022, businesses could fully deduct R&D expenses in the year they occurred. That changed with the Tax Cuts and Jobs Act, which required amortizing domestic R&D over 5 years and foreign R&D over 15 years under Section 174.

OBBBA reversed that rule for most small businesses.

Here is what OBBBA now allows:

• Immediate full expensing of domestic R&D costs starting in 2025
• A chance to amend 2022, 2023, and 2024 returns to apply the new rules retroactively
• New options for how to handle unamortized R&D:
  
  • Deduct all in one year
  • Spread over two years
  • Or stay with the original amortization schedule

These changes simplify compliance and create opportunities to unlock refunds for the past three years.

Note: The change only applies to domestic research. Foreign R&D must still be amortized over 15 years.

Who Qualifies for Retroactive Refunds?

Not all businesses qualify for OBBBA’s retroactive fix. To be eligible, you must meet the gross receipts test:

• Average gross receipts of $31 million or less over the past three years
• Applies to both startups and more mature businesses, as long as you’re under the threshold

If eligible, you can amend your prior returns and take advantage of full expensing under the new Section 174A, potentially resulting in larger deductions and a real cash refund.

You Can Go Back Up to 3 Years

If you missed R&D credits in past years, you can typically amend your federal returns going back three tax years. This includes:

• Filing or correcting Form 6765 (Credit for Increasing Research Activities)
• Fixing your Section 174 treatment to align with OBBBA or IRS compliance
• Recalculating your R&D credit based on updated qualified expenses
• Coordinating with your CPA and incentives team to refile properly

For startups, this often leads to a windfall of credits to use against future income taxes. For profitable businesses, it can create large tax refunds from overpaid income taxes.

Payroll Offset Still Applies for Startups

Startups under 5 years old with under $5 million in gross receipts can apply their originally filed R&D credit against payroll taxes, rather than income tax.

The credit itself is not capped as it is completely relative to your qualified expenses, however, you are allowed to use up to $500,000 per year against payroll liabilities.  Going forward, the combination of OBBBA’s full expensing and the payroll offset can significantly improve your current-year cash flow.

Don't Overlook State Credits

Thirty-seven states offer their own version of the R&D tax credit, including:

• California
• Texas
• New York
• Arizona
• Illinois
• Massachusetts

Most allow you to amend prior years just like the federal program. These can be stacked with your federal credits and result in additional refunds at the state level.

How to Start the Refund Process

If you think your company missed out, here is what to do:

1. Review past filings — focus on 2022 through 2024
2. Identify qualified R&D activities and expenses
3. Fix Section 174 treatment using the new rules under OBBBA
4. Amend your federal and state returns
5. File Form 6765 for each corrected year
6. Monitor your refund status with your CPA or tax partner

It may sound technical, but with the right team, it can be a fast and painless process.

How TaxTaker Helps

At TaxTaker, we work with startups, software teams, and growth-stage companies to:

• Identify qualifying research expenses
• Navigate the complex IRS rules under Section 41 and Section 174A
• Fix old filings and recover missed R&D credits
• Claim refunds for both federal and state returns
• Work seamlessly alongside your CPA or fractional CFO
  

If you missed years of credit or filed without proper 174 compliance, we can help you correct the course and reclaim your refunds.

Final Thoughts

The R&D tax credit was already powerful. OBBBA just made it better.

Startups and small businesses now have a clear path to recover lost value from prior years and simplify compliance going forward. Whether you want to reduce payroll taxes, claim retroactive refunds, or stay ahead of changing IRS rules, this is the moment to act.

Want to know how much you left on the table? Talk to TaxTaker and start your R&D refund process today.