Your Section 174 Refund Window Closes July 6

A founder I work with runs a 22-person software company at $9M ARR. In 2022 her tax bill jumped from $48K to $214K. Same revenue trajectory, mostly the same payroll, no acquisition, no one-time event. Her CPA explained it as "the new R&D rule." She paid the bill and moved on. Same thing happened in 2023 and 2024.

Last week I asked if she'd filed amended returns under the OBBBA fix. She hadn't. Her CPA hadn't raised it.

She has a refund of roughly $310K sitting on the table. The deadline to claim it is July 6.

What changed

A 2017 tax law required businesses to capitalize and amortize domestic R&D expenses over five years instead of deducting them in the year incurred. It was supposed to be temporary. It became permanent in 2022. For a software business where most of the workforce is engineering, that meant a tax bill calculated on income the company hadn't earned in cash terms.

OBBBA, signed in July 2025, restored full expensing under a new Section 174A. It also opened a retroactive window for eligible small businesses, those averaging under $31M in gross receipts. They can amend returns for 2022 through 2024 and recover the cash they overpaid.

This deadline is the earlier of July 6, 2026 or the standard refund statute. For most companies that means July 6.

Why this hasn't been done yet

Three reasons keep coming up.

Whoever filed the original returns isn't always the one with bandwidth to amend them. Tax season just ended. Amending three prior years for a single client is a fifteen-hour engagement that doesn't show up on any compliance calendar. It's an opt-in motion, and most firms aren't running it proactively.

Founders who moved on from the 2022-2024 tax pain don't think about going back to it. That cash already left the building. Recovering it feels like rework instead of revenue.

There's also an all-or-nothing rule. If you amend, you have to amend all three years, not just the worst one. That's a bigger lift than people expect, and the refund math has to clear it.

Companies that file by July 6 will recover real cash. Companies that don't will treat 2022-2024 as a sunk loss they didn't have to take.

What the refund is worth

For a 20-person engineering team at $200K fully loaded, you're looking at roughly $4M of capitalized R&D under the old rule across three years. At a 21% federal rate, the cash gap between expensing and amortizing those costs over five years lands in the $200-400K range, depending on state nexus and profitability.

That's not a rounding error for a $9M ARR business. It's most of a senior hire, or a quarter of runway extension, or a debt paydown that resets your credit profile before renewal.

State conformity is the wrinkle. Some states didn't follow the 2017 capitalization rule. Others did. A handful are still deciding whether to follow the 2025 fix. Your federal refund may not match your state refund, and the amended state returns have their own deadlines.

What to do this week

Pull your 2022, 2023, and 2024 federal returns. Look at the Schedule M-1 or the Section 174 capitalization detail. If R&D got amortized rather than expensed, you have a refund opportunity.

Call your tax preparer and ask one question: are you filing amended returns under the OBBBA Section 174A retroactive election before July 6? If the answer is no, ask why not. A "we hadn't gotten to it" answer means you should get on the schedule this week. If they don't have the bandwidth, find a firm that does specialized R&D credit work. Several are running this as a service line through July.

July 6 doesn't extend. Every week from here costs you queue position.