Most businesses claiming the R&D tax credit spend their time focused on the actual work: developing products, improving processes, solving technical problems, and managing costs. Documentation often becomes a year-end exercise, with records gathered only when it's time to prepare the return.

The revised Form 6765 makes that approach much harder. The IRS now expects significantly more project-level detail than many businesses have historically tracked, which means recordkeeping practices that worked in the past may no longer be enough.

Let’s take a few minutes to discuss changes on IRS Form 6765.

What changed on IRS Form 6765 for 2026?

IRS Form 6765 now includes expanded reporting for R&D tax credit claims, including Section E disclosures, Section F qualified research expense summaries, and Section G business-component reporting. Section G is optional for tax years beginning before 2026 and generally required for tax years beginning after 2025, unless an exception applies.

If you're a business owner, CFO, controller, or member of a tax team claiming the R&D credit, here's what the revised form means for your documentation process and filing preparation, along with the steps our CPAs recommend taking.

What Is IRS Form 6765?

Form 6765 is filed with a federal income tax return to claim the Credit for Increasing Research Activities under Internal Revenue Code Section 41. It calculates your R&D credit and, with the revised version, documents the research behind it in considerably more detail than before.

Before getting into what changed, here are the terms that come up most throughout this article:

• R&D tax credit: A federal credit for businesses that develop or improve products, processes, or software, calculated based on qualifying research activity under Section 41 of the tax code. If you want to understand whether your work qualifies or how the credit is calculated, our federal R&D tax services page covers that in full.
• Qualified research expenses (QREs): The costs that count toward the credit. Mainly wages for qualified research work, supplies, certain contract research, and computer rental or cloud costs.
• Section 41: The portion of the tax code that defines the credit and the qualifying rules.
• The four-part test: Work must have a permitted business purpose, be technological in nature, involve technical uncertainty, and rely on a process of experimentation.

These definitions haven’t changed. What has changed is the level of documentation the IRS now expects taxpayers to provide. Instead of relying primarily on calculations and summary information, the revised form places greater emphasis on documenting research activity at the project level.

What Changed on Form 6765 for 2026?

The IRS went from a mostly calculation-driven form to one that also wants a record of the research itself. New reporting sections were added, and the form was reorganized around them.

Of the four areas in that table, Section G creates the biggest operational change. The other sections focus largely on disclosures and summaries. Section G is where the recordkeeping gap becomes a filing problem.

Which Businesses Are Most Affected by the New Form 6765 Requirements?

The revised form affects any business that claims the R&D tax credit, but some industries feel the impact more than others, typically because their research activity spans multiple concurrent projects with shared costs.

Software and technology companies often run several development tracks at once. Wages for engineers frequently touch multiple features or platforms. Without project-level tracking, allocating those wages to individual business components at filing time is a reconstruction exercise, not a reporting one.

Manufacturers developing new production processes or product improvements often track R&D spending by department or cost center rather than by project. That works fine for internal management. It doesn’t work for Section G.

Engineering and construction firms pursuing improved design methodologies or process innovations may find that their R&D activity is embedded inside larger project budgets, making component-level separation harder than it looks.

Medical device and healthcare companies developing new products or clinical processes often have long development timelines. The longer the timeline, the harder it is to reconstruct documentation that wasn’t captured during the work.

Form 6765 Effective Dates for 2024, 2025, and 2026

The practical first question is usually, "Does this apply to my return?" The answer depends on the tax year being filed and whether any Section G exceptions apply.

Section G is optional on 2024 and 2025 returns and is generally required starting with 2026.

A note on what you may have read elsewhere: Some sources describe Section G as mandatory beginning in tax year 2025. That’s not accurate. Section G is optional for any tax year beginning before 2026. If you’ve seen filing guidance that says otherwise, check it against the current IRS Instructions for Form 6765 before acting on it.

Section G Business Component Reporting: What Changes in 2026

Section G is where the documentation shift lands. Instead of reporting research expenses as one figure, you report information at the business-component level and connect your QREs to specific projects.

For each component you report, the form asks for descriptive information and the research expenses tied to it. That’s a real step up from the old form. Companies that keep notes while the work is happening will have a much easier time than those pulling records together at filing time.

Is Section G Mandatory?

Section G is optional for 2024 and 2025 returns and is generally required for tax years beginning after December 31, 2025, unless an exception applies.

Who Is Exempt From Required Section G Reporting?

Some businesses remain exempt from required Section G reporting even under the current rules. These exemptions are worth understanding separately from the reporting limits in the next section, because they often get lumped together when they’re actually two different things.

Exceptions may include:

• Qualified small businesses claiming the payroll tax credit, as defined under Section 41(h) of the tax code.
• Certain taxpayers with total QREs of $1.5 million or less (measured at the controlled group level) and gross receipts of $50 million or less, when the credit is claimed on an originally filed return.

Controlled-group rules and the original-return requirement are both part of how these exceptions work. Confirm your situation against the current IRS Instructions for Form 6765 before relying on either one.

How the 80% / Top 50 Business Component Rule Works

If you are required to complete Section G, you generally don’t have to report every project. You report business components that account for at least 80% of your total QREs, listed from largest to smallest, up to a cap of 50 business components.

This is a reporting limit, not an exemption. Hitting the 80% mark or reaching 50 components doesn’t mean you’re off the hook for Section G. It tells required filers when they can stop adding components.

What Is a Business Component?

A business component is the product, process, software, technique, formula, or invention tied to your research activity. A manufacturer’s new production process qualifies. A software company’s new platform feature qualifies.

Standard maintenance and minor cosmetic updates generally don’t, even when they take real time and money. No genuine technical uncertainty means no qualifying research, which means no qualifying business component.

What This Looks Like When It Goes Wrong

Here’s a situation that comes up more than it should. A manufacturer has been claiming the R&D credit for several years. Their accounting team tracks research wages by department, not by project. Supplies get coded to a general R&D cost center. Contract research invoices go into one bucket.

When Section G becomes required, they need to report individual business components with expenses tied to each one. The wages, supplies, and contract costs that fed the credit for years now need to be allocated at the project level. None of that allocation exists. They’re looking at reconstructing records for work that happened 12 to 18 months earlier, with employees who may not remember the specifics, on projects that weren’t tracked with this level of detail in mind.

By the time the return is being prepared, the real issue isn't documentation. It's the lack of a recordkeeping process that captures project-level information throughout the year.

Sections E and F: What the Form Asks Before You Get to Section G

Sections E and F set up the business-component detail in Section G. Think of them as the context and the summary that frame everything else.

Businesses that have never categorized costs by wage, supply, contract research, and computer-related expenses often discover those reporting gaps for the first time during filing preparation, which is not the ideal moment for that discovery.

How Section 174A and the OBBBA Affect R&D Expense Treatment for 2026

This area sits outside Form 6765 itself, but it affects the same dollars, so it belongs in this conversation.

For tax years beginning after December 31, 2024, Section 174A generally allows domestic research and experimental expenditures to be deducted currently, with an election to capitalize and amortize them over at least 60 months. This came from the One Big Beautiful Bill Act. We’ve covered in detail how the OBBBA changed R&D tax credits if you want the full picture. Transition rules may apply to costs from 2022 through 2024, so confirm treatment with your professional CPA before filing.

There’s also coordination to think through between the deduction and the credit. The Section 280C election lets you take a reduced credit in exchange for a full deduction. Some businesses default to the current deduction without reviewing whether that coordination actually works in their favor. With Section 174A transition rules still developing, that decision deserves more than a quick assumption.

What the New Form 6765 Means for Your Business

The revised form affects much more than the tax return itself. It changes the type of information businesses need to collect and maintain throughout the year.

The consequences usually become apparent during return preparation. A company finishes its fiscal year with strong R&D activity. Their CPA begins preparing the return and requests project-level QRE breakdowns. The accounting team pulls the general ledger. The R&D wages are coded by employee, not by project. The supplies are in one account. The contract research invoices reference vendor names rather than business components. Nobody documented the four-part test in real time because nobody thought they’d need it in that format.

The return gets filed. The credit gets claimed. But if the IRS asks questions, the documentation doesn’t hold up at the component level the way the revised form now expects. That’s the gap the new Form 6765 creates for businesses that haven’t changed their tracking during the year.

How to Prepare for the New Form 6765

You don’t need to redo your entire recordkeeping system. These are the steps we walk R&D credit clients through when we want their next filing to go smoothly.

1. Identify your business components early in the year, before spending starts.
2. Track QREs by project or business component, not as a single number.
3. Document the four-part test while the work is happening.
4. Keep wage, supply, contract research, and computer-related costs separated from day one.
5. Confirm whether any Section G exceptions apply to your situation.
6. Review Section 174A and Section 280C treatment with a CPA before filing.
7. If you're still preparing a 2025 return, consider working through the Section G reporting framework now. Even when not required, the exercise can help identify documentation gaps before they become filing issues on future returns.
8. Start working with an R&D tax credit specialist earlier in the filing process, not at the last minute.

Utah businesses can also learn more about our Utah R&D tax credit services.

Frequently Asked Questions

Here are answers to the questions we hear most often about Form 6765, Section G, and the R&D tax credit.

What do most businesses get wrong about Section G?

Three things. Confusing the 80%/Top 50 reporting limit with an exemption from Section G, they’re not the same thing. Assuming the QRE threshold exemption applies without checking the controlled group rules, the $1.5 million threshold is measured at the group level rather than per entity. And waiting until filing time to identify business components for work that happened over a year earlier, when the records to support it no longer exist in the right format.

What changed on Form 6765 for 2026?

The IRS added Section E disclosures, a Section F QRE summary, and Section G business-component reporting. The biggest shift is in Section G, which asks you to tie your research expenses to specific projects rather than report one combined figure. Section G was optional for tax years beginning before 2026 and is generally required for tax years beginning after December 31, 2025, unless an exception applies.

Is Section G mandatory?

Section G is optional for tax years beginning before 2026, which includes your 2024 and 2025 returns. It’s generally required for tax years beginning after 2025, unless an exception applies. Confirm your situation against the current IRS instructions.

What is a business component on Form 6765?

A business component is the product, process, software, technique, formula, or invention tied to your research activity. For a manufacturer, it might be a new production process. For a software company, a new platform feature. It’s the unit you report your research expenses against in Section G.

Who is exempt from required Section G reporting?

Possible exceptions include qualified small businesses claiming the payroll tax credit and certain taxpayers with total QREs of $1.5 million or less and gross receipts of $50 million or less, claimed on an original return. Controlled-group rules apply. Confirm eligibility against the current IRS Instructions for Form 6765.

What is the 80% / Top 50 business component rule?

If you’re required to complete Section G, you generally report the components that account for at least 80% of your total QREs, up to 50 components. This is a reporting limit for required filers, not an exemption from Section G itself.

Where can I find the latest Form 6765 instructions?

The current form and instructions are on the IRS website at About Form 6765 and the Instructions for Form 6765. The form is updated regularly, so check the most recent version before you file.

How does Section 174A affect my R&D credit?

For tax years beginning after December 31, 2024, Section 174A generally allows domestic R&E expenditures to be deducted currently, with an option to capitalize and amortize over at least 60 months. Transition rules may apply to costs from 2022 through 2024. The interaction with Section 280C and the credit is worth reviewing with your CPA before filing.

Final Thoughts

The revised Form 6765 doesn't change who qualifies for the R&D tax credit. It changes what you need to show. Organizations that already track research by project are adapting more easily. Those who don't are finding out during return preparation.

At CMP, our R&D tax credit team works with businesses across manufacturing, software, engineering, and healthcare to document qualifying research, calculate credits, and prepare claims that hold up under IRS scrutiny.

We work with businesses nationwide, including clients throughout Utah across the Wasatch Front, Cache Valley, and Southern Utah. If you want to talk through how the revised Form 6765 affects your situation, we’re happy to take a look.