R&D Tax Credit Changes: 7 Essential Steps Businesses Must Take Now to Prepare for New Form 6765 Requirement

Article | October 02, 2025

Authored by Your Firm LLC

The IRS has rolled out the most significant overhaul to R&D tax credit reporting since 2009, fundamentally changing how businesses must document and report their research activities. With new Form 6765 requirements becoming mandatory for most taxpayers beginning with tax year 2026 (processing year 2027), companies claiming the federal R&D tax credit face a dramatically increased documentation burden—but those who prepare now will navigate these changes successfully.

"The new reporting requirements represent a seismic shift in R&D credit compliance," explains [Tax Partner Name], Partner at MBN & Company. "Companies that start preparing today will have a significant advantage over those who wait until the last minute. The key is building robust documentation systems that capture the granular detail the IRS now requires."

The Stakes Have Never Been Higher

The centerpiece of these changes is the new Section G, which requires businesses to report detailed information about their "business components"—essentially breaking down R&D activities by project or product line. Companies must now report on business components representing 80% of their total qualified research expenditures (QREs), with a cap of 50 components. For each component, businesses must provide unprecedented detail including principal business activity codes, research purposes, and a breakdown of wages by employee role (researchers, supervisors, and support staff).

While Section G remains optional for tax year 2025, it becomes mandatory in 2026 for most companies. The only exemptions are qualified small businesses claiming payroll tax credits and companies with both QREs under $1.5 million and gross receipts under $50 million at the controlled group level.

Your 7-Step Action Plan

1. Conduct an Immediate Documentation Audit
Start by reviewing your current R&D documentation and processes. Most companies will find significant gaps between what they currently track and what the new form requires. Identify which projects qualify as "business components" and assess whether you have adequate contemporaneous documentation for each.

2. Implement Enhanced Time-Tracking Systems
The new form requires wage breakdowns by employee role—researchers performing the work, supervisors overseeing research, and employees supporting research activities. Upgrade or implement time-tracking systems that capture not just hours worked on projects, but the specific role each employee plays in research activities.

3. Establish Business Component Classification
Develop a systematic approach to defining and categorizing your business components. This includes assigning unique identifiers, determining component types (product, process, software, formula, etc.), and ensuring consistent classification across all research activities.

4. Create Detailed Project Documentation
For each business component, document the specific information sought to be discovered and how it meets the four-part test for qualified research under IRC Section 41. This documentation must demonstrate that "substantially all" research effort meets qualification requirements.

5. Train Your Finance and R&D Teams
Ensure key personnel understand the new requirements and documentation standards. Cross-functional training between finance, R&D, and project management teams is essential for maintaining consistent, compliant documentation throughout the year.

6. Start R&D Studies Earlier
Plan to begin your annual R&D tax credit study 60-90 days earlier than in previous years. The additional documentation and analysis required under the new rules will extend preparation timelines significantly.

7. Review Officer Wage Classifications
The revised form specifically asks whether officer wages are included in QREs. Since "officer" definitions vary by state law, review and clarify these designations in advance to avoid complications during filing.

Don't Navigate This Alone

"These changes aren't just about compliance—they're about positioning your company to maximize R&D credit benefits while meeting heightened IRS scrutiny," notes [Senior Tax Manager Name], Senior Tax Manager specializing in R&D credits at MBN & Company. "Companies that invest in proper preparation now will actually strengthen their overall R&D credit processes for years to come."

The transition period offers a valuable window of opportunity, but only for companies that act decisively. While the IRS has extended the comment period through March 2026 and made Section G optional for 2025, waiting until the last minute will leave your business scrambling to meet complex new requirements.

Ready to prepare your business for the new R&D tax credit requirements? MBN & Company's tax professionals are closely monitoring IRS guidance and helping clients develop comprehensive preparation strategies. Our specialized services include:

• R&D Credit Studies and Documentation: Comprehensive analysis and documentation of your qualified research activities to maximize credit benefits while ensuring compliance
• Advanced Tax Planning: Proactive strategies to minimize liabilities and optimize tax outcomes across federal, state, and international jurisdictions
• Multi-State and International Tax Compliance: Expert guidance for complex tax situations involving multiple jurisdictions
• Business Advisory and Consulting: Strategic financial guidance including CFO services, transaction advisory, and business valuations
• Risk Advisory and Cybersecurity: Internal controls consulting and cybersecurity assessments to protect your business

As a Top 100 certified public accounting firm serving U.S. and international clients, MBN & Company delivers comprehensive, customized solutions through our team of industry-focused experts. Our award-winning client service team has earned recognition three years running from ClearlyRated, with over 82% of clients rating us 9 or 10 out of 10.

Contact our office today to schedule a consultation with our R&D credit specialists and ensure your company is fully prepared for these significant changes. Don't let new requirements catch you off guard—let MBN & Company help you navigate the evolving landscape with confidence.