OBBB Creates Opportunity to Revisit Section 280C Elections for R&D Tax Credits

By: Prime Tax Group

June 16, 2026 | 4 Minute Read

Related Topics: R&D Tax Credits, OBBB, Section 280C, Tax Planning

Introduction

The passage of the One Big Beautiful Bill Act (OBBB) delivered several significant changes impacting the treatment of research and development expenditures. While much of the attention has focused on the restoration of immediate expensing for domestic R&D costs, another provision may create an equally valuable planning opportunity for certain businesses pursuing the federal Research & Development Tax Credit.

For eligible taxpayers, the OBBB established a temporary window allowing businesses to make or revoke a Section 280C election on amended returns for tax years 2022 through 2024. Because Section 280C elections have historically been difficult—or in many cases impossible—to revisit after a return has been filed, this relief represents an uncommon opportunity to reassess prior-year tax positions.

However, the window to act may be closing soon.

What Changed Under the OBBB?

The OBBB included provisions intended to provide relief from several tax challenges that emerged following the implementation of mandatory R&D capitalization requirements under Section 174.

As part of that relief, eligible small businesses were granted additional flexibility when filing amended returns for tax years 2022 through 2024. Among those changes was the ability to make or revoke a Section 280C election during the amendment process—something that generally was not permissible under prior rules.

For businesses evaluating R&D tax credit opportunities, this provision may allow taxpayers to revisit decisions that were previously considered final.

What Is the Section 280C Election?

Businesses claiming the federal R&D Tax Credit under Internal Revenue Code Section 41 must also address the interaction between the credit and the underlying research expense deductions.

Section 280C was created to prevent taxpayers from receiving a double tax benefit from the same research expenditures. As a result, taxpayers generally must choose between:

Claiming the full R&D tax credit while reducing related deductions, or
Electing a reduced credit under Section 280C and preserving those deductions.

The most advantageous approach depends on a variety of factors, including tax rates, ownership structure, current profitability, and future tax planning objectives.

While many taxpayers elect the reduced credit for simplicity, there is no universal answer. Each situation should be evaluated individually.

Why Is This Opportunity Unique?

The significance of this relief lies in the fact that Section 280C elections are typically made on a timely filed return and are generally treated as irrevocable.

In other words, taxpayers ordinarily do not have the luxury of revisiting the decision years later after gaining additional information or a better understanding of the tax consequences.

The OBBB temporarily changed that reality for qualifying businesses.

For taxpayers who initially chose one election but now believe the alternative approach may produce a more favorable result, the legislation provides a rare second chance to reevaluate prior filings.

Opportunities to retroactively alter an election that directly affects the value of an R&D tax credit claim are uncommon, making this provision particularly noteworthy.

Who Should Consider Reviewing Prior Returns?

Businesses may benefit from reviewing prior-year filings if they:

Conducted qualifying R&D activities during tax years 2022, 2023, or 2024.
Claimed an R&D tax credit and made a Section 280C election.
Chose not to pursue an R&D tax credit due to uncertainty surrounding Section 280C treatment.
Are considering amending prior-year returns.
Meet the eligibility requirements established under the OBBB relief provisions.

Even businesses that previously concluded an R&D credit claim was not worthwhile may discover new planning opportunities when revisiting prior returns under the updated guidance.

The Deadline Is Approaching

The opportunity to make or revoke a Section 280C election under the OBBB is temporary.

For many eligible taxpayers, action must be taken by July 6, 2026, or before the applicable statute of limitations for claiming a refund expires, whichever occurs first.

Once this relief period closes, taxpayers generally will revert to the traditional election framework, eliminating the ability to revisit these decisions through amended returns.

Given the approaching deadline, businesses should evaluate their options sooner rather than later.

Key Takeaways

The OBBB created a temporary opportunity for certain businesses to make or revoke a Section 280C election on amended returns.
The relief generally applies to tax years 2022 through 2024.
Section 280C elections typically cannot be revisited after a return is filed.
This temporary exception provides a rare opportunity to reevaluate prior-year R&D tax credit positions.
The relief period may expire as early as July 6, 2026.

Next Steps

If your business performed qualifying research and development activities during tax years 2022 through 2024, now may be the ideal time to review prior filings and evaluate whether a Section 280C election change could improve your tax position.

Prime Tax Group’s tax credit specialists can help assess eligibility, analyze potential outcomes, and determine whether this temporary OBBB relief presents an opportunity for your business.

Sources & References

Important Information: The information contained in this article is provided for general informational and educational purposes only. It is not intended to serve as tax, legal, accounting, or financial advice and should not be relied upon as such. Tax laws, regulations, and administrative guidance may change and can vary based on individual facts and circumstances. Businesses should consult with qualified tax advisors regarding their specific situation before making tax-related decisions or filing original or amended returns.

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