On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law as Public Law 119-21. ¹ Buried six hundred pages in, in Subtitle A of Title I, is a new Internal Revenue Code §174A that does something Congress rarely does: it admits a mistake. After three years of mandatory five-year amortization of domestic research and experimental expenditures under TCJA-era §174, immediate expensing returns, and small businesses have a one-time window to recover what they overpaid.
We have seen the impact of TCJA-era §174 across roughly 140 closely-held client engagements. For software and engineering-heavy businesses, the average increase in 2022 cash taxes was 38% of the pre-§174 figure. For a small fabrication client with $2.1M in qualifying R&D, the first-year cash hit was just under $700,000. That cash now becomes recoverable.
What follows is a practical reading of new §174A, the procedural guidance under Revenue Procedure 2025-28 ², and the narrow election windows that close within months. The most consequential of these closes for many calendar-year businesses on July 4, 2026, exactly one year after enactment.
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