The R&D Tax Credit is back! Find out how the Big Beautiful Bill Act can fund your R&D. Learn More
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For reports originally due on or after January 1, 2026, Texas replaced its prior R&D tax credit structure with a new, streamlined franchise tax credit under Subchapter T. The previous system, which let businesses choose between a franchise tax credit and a sales and use tax exemption, has been repealed for periods beginning in 2026.
The credit is calculated based on Qualified Research Expenses (QREs), using the same amounts reported on IRS Form 6765, and generally follows federal rules under IRC §41. Only research conducted within Texas qualifies. The credit equals 8.722% of QREs exceeding a base amount, or 10.903% for research conducted in collaboration with a Texas public or private institution of higher education.
Unlike the prior system, the new credit may be refundable for certain taxpayers, including those below the no-tax-due threshold, those owing less than $1,000 in franchise tax, and certain veteran-owned businesses. Taxpayers using the E-Z computation method are not eligible for a refund.
To claim the credit, you must first file IRS Form 6765 with the IRS, then file Form 05-182 (Subchapter T Research and Development Activities Credits Schedule) along with Form 05-181 (Credits Summary Schedule) and your Long Form Franchise Tax Report (Form 05-158-A/B). If your business doesn't owe franchise tax, you may instead need Form 05-183 (and Form 05-184 for combined groups) to claim a refundable credit, due by November 15.
It's important to note that the sales and use tax exemption for R&D purchases has been eliminated for periods beginning in 2026. The franchise tax credit under Subchapter T is now the only state-level R&D incentive available in Texas, so there's no longer a choice to model between the two options. Our team can help you calculate your Texas QREs, determine whether your credit qualifies for a refund, and file correctly under the new rules.
Starting in tax year 2025, businesses can now immediately deduct domestic R&D expenses in the year they occur instead of spreading deductions over five years. The bill also offers refund opportunities for small businesses and faster deduction schedules for larger companies.
If your business has $31 million or less in annual gross receipts, you may be able to:
File amended returns for 2022–2024 to get cash refunds for previously capitalized R&D costs
Deduct remaining unamortized R&D expenses faster starting in 2025
Apply your R&D credit against payroll taxes—up to $500,000 per year for qualifying startups
Yes. Eligible small businesses can retroactively deduct R&D costs from 2022–2024 and claim refunds. Even larger companies can accelerate the deduction of past R&D costs over one or two years starting in 2025.
No. The 15-year amortization rule for foreign R&D remains in place. The new immediate expensing option only applies to U.S.-based research and development.
Savings vary, but many businesses may recover hundreds of thousands of dollars through a combination of:
Full expensing of domestic R&D costs
Retroactive refunds for 2022–2024
Annual R&D tax credits (often worth 5–10% of qualifying expenses)
Startups with less than $5 million in annual revenue can use the R&D credit to offset payroll taxes—up to $500,000 per year—resulting in quarterly cash refunds, even without taxable income.
Work with our expert team at TaxTaker. We help innovative companies like yours identify, document, and claim the maximum R&D tax credit available—while ensuring you stay fully compliant with IRS requirements. Our team specializes in both federal and state R&D tax credits, and we know how to uncover hidden value by reviewing past filings for potential refund opportunities. With the new 2025 rules in place, we’ll build a tailored strategy that maximizes your savings now and in the years ahead. That’s why businesses across the country trust TaxTaker to deliver results they can count on.
Working with TaxTaker is risk free. TaxTaker collects a success fee only if you qualify for a tax credit.
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