1-year or 2-year? Compare the Section 174A R&E catch-up election.

1. Your remaining unamortized balance

The portion of your 2022-2024 domestic R&E costs not yet amortized as of the start of your first tax year beginning after December 31, 2024 — 2025, for a calendar-year filer. This is not the retroactive-amendment path (its election window closed July 6, 2026); it is the choice you still make on your 2025 return.

2. Expected taxable income and rate, before this deduction

Income can be negative — enter a negative number if you expect a loss year. Rates can differ between the two years; that difference is exactly what this tool is built to weigh.

3. Time value of money (optional)

Defaults to 6% — a middle-of-the-range planning assumption between a risk-free rate and a small business's typical cost of borrowed cash (not an IRS-published figure). Adjust it to your own cost of capital; a 0% rate compares the two paths on nominal dollars only.

Comparison

What this does not cover

• Not a full tax return. This estimates the cash tax effect of one deduction only — not your total tax liability, other deductions or credits, self-employment or payroll tax, AMT, or state tax (state conformity to Section 174A varies).
• Does not verify small-business eligibility. The $31 million average-gross-receipts test (2022-2024) is confirmed by you, not checked here.
• No net operating loss (NOL) carryforward modeling. When a deduction exceeds a year's taxable income, this tool flags the excess but does not estimate what a resulting NOL is worth in a later year, the Section 172(a) 80%-of-taxable-income limitation, or state NOL rules.
• Does not model the retroactive-amendment election. That separate path (amending 2022-2024 returns directly) had its own election window, which closed July 6, 2026.

Common questions

What is the Section 174A catch-up deduction?

A one-time deduction created by the One Big Beautiful Bill Act (OBBBA) for an eligible small business that had capitalized and was amortizing domestic research and experimental (R&E) costs from 2022-2024 under the old Section 174 rules. It covers whatever portion of those costs was not yet amortized by the start of the business's first tax year beginning after December 31, 2024 -- 2025, for a calendar-year filer -- and is claimed on that 2025 return.

Who counts as an "eligible small business" for this catch-up?

A business whose average annual gross receipts for 2022, 2023, and 2024 (including a controlled group's) were $31 million or less -- the same Section 448(c) gross-receipts test used elsewhere in the tax code. This calculator does not check your gross receipts against that threshold; confirm your own eligibility before relying on either election.

What is the difference between the 1-year and 2-year election?

Both are elected on the 2025 return under Rev. Proc. 2025-28. The 1-year option deducts the entire remaining unamortized balance in 2025. The 2-year option spreads it ratably over two years -- half in 2025, half in 2026. Taking it all in 2025 front-loads the tax savings, which is better if 2025's rate or income is expected to be higher than 2026's. Spreading it out is better if 2025's rate or income is expected to be lower -- for example a loss or near-breakeven year -- or if the rate is expected to rise in 2026.

What happens if the deduction is bigger than my taxable income for that year?

The excess does not disappear, but it also does not produce an immediate cash tax saving that year -- it can create or increase a net operating loss (NOL) instead. This calculator flags that clearly and caps the current-year cash saving at that year's taxable income before the deduction. It does not model NOL carryforward value, the 80%-of-taxable-income limitation on using a post-2017 NOL in a later year, or state conformity -- that is a case to bring to a tax professional.

Is this the same as amending my 2022-2024 returns directly?

No. A separate, fully retroactive election existed under the same Rev. Proc. to amend 2022-2024 returns directly, but its election window closed July 6, 2026. This calculator only compares the two elections still available on the 2025 return -- the full-balance-in-2025 option and the split-over-2025-2026 option -- which is the live choice a small business faces right now.

Is this tax advice?

No. This calculator applies the two published Rev. Proc. 2025-28 catch-up election structures to the numbers you enter. It does not verify your small-business eligibility, does not model net operating loss carryforward value, does not know your complete tax return, and is not a substitute for reviewing the IRS's own guidance or consulting a qualified tax professional before you elect either option.