September 23, 2025

R&D gets a tax makeover under the One Big Beautiful Bill

6 minutes

Section 174 has long been a source of confusion for small business owners navigating R&D expenses. In this episode, we dive into what Section 174 is, the recent changes introduced through the One Big Beautiful Bill Act, and how these updates impact your bottom line. From immediate expensing of R&D costs to state-level differences, you’ll learn the practical steps business owners should take now to stay compliant and maximize their deductions.

[01:05] What Section 174 is and why small business owners should care

[02:07] Major changes since the 2017 Tax Cuts and Jobs Act — and what OB3 restores

[03:15] Real-world impact of R&D expenses on small business tax filings

[04:05] Three key action steps: recordkeeping, cash flow planning, and working with tax advisors

[04:44] State-level differences to watch for when applying deductions

[05:03] How to stay up to date with IRS guidance and evolving tax rules

This content is based on generally accepted HR practices, is advisory in nature, and does not constitute legal advice or other professional services. ADP does not warrant or guarantee the accuracy, reliability, and completeness of the content. Employers are encouraged to consult with legal counsel for advice regarding their organization's compliance with applicable laws. This content is current as of the published date.

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