Section 174 R&D Tax Relief: How to Reclaim $100K+ in Cash Flow from 2022-2024
Manufacturers have until July 2026 to amend returns and recover significant R&D deductions. The "One Big Beautiful Bill" restored immediate expensing—learn how to reclaim $50K-$500K+.
Schapira Team
Team leader of Finance
August 15, 2024
4 min read
As of mid-August 2025, manufacturers are racing against the clock to recover lost cash flow. The "One Big Beautiful Bill," signed July 4, 2025, restored immediate expensing of domestic R&D under Section 174—ending a three-year period of forced five-year amortization. Small manufacturers have until July 4, 2026 to amend their 2022–2024 returns and claim significant refunds.
The 2022-2024 Cash Flow Shock
From January 1, 2022 through December 31, 2024, Section 174 required manufacturers to amortize R&D expenses over five years instead of deducting them immediately. This change has:
- Deferred hundreds of thousands in tax deductions
- Artificially inflated taxable income
- Driven extra tax payments when funds were needed for operations
Example:
A company spending $500,000 annually on R&D in 2022–2024 could only deduct $100,000 per year, resulting in $400,000 of deferred deductions. At a 21% tax rate, this forced an extra $84,000 payment each year on money already invested.
The July 2025 Fix and Amendment Window
The One Big Beautiful Bill (effective July 4, 2025) reinstated immediate expensing for current and future R&D costs and opened a window to:
- Amend 2022, 2023, and 2024 returns
- Recover deferred deductions with interest
- Deadline: July 4, 2026 (11 months away)
Impact for Small Manufacturers (Under $31M Revenue):
- Potential refunds of $50,000–$500,000+ depending on R&D spend
- Quick cash infusion to fund innovation, equipment upgrades, and working capital
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