The 2026 R&D Tax Credit Playbook: Strengthening Claims and Capturing Value

The research and development (R&D) tax credit remains a valuable way for companies to offset tax liability, improve cash flow, and reinvest in products, processes, and software. However, the environment for claiming the credit has changed. Evolving IRS expectations, expanded Form 6765 requirements, and the rapid adoption of AI are making R&D credit claims more data-driven, transparent, and dependent on documentation created during normal business operations.

Claims need to be identified, quantified, and supported more carefully now. Companies that treat the credit as a year-end calculation may miss eligible activities, overlook useful documentation, or create unnecessary risk in the event of IRS review.

Why Form 6765 Matters More Now

Form 6765, Credit for Increasing Research Activities, is becoming increasingly relevant. The revised form and instructions require taxpayers to provide more information, including details on qualified research expenses, officers’ wages, acquisitions or dispositions, and business components. For tax years beginning before 2026, Section G, Business Component Information, is optional for all filers. For tax years beginning after 2025, Section G is expected to be required for many taxpayers, subject to exceptions. Companies may need to describe qualifying projects, align related costs, and distinguish between direct research, supervision, and support activities.

Although the IRS has adjusted implementation timelines before, businesses that strengthen documentation now will be better positioned as reporting requirements evolve. Companies that wait may find details harder to locate, particularly when qualifying work is spread across several teams.

The Importance of Connected Documentation

A strong claim is built on documentation that connects the technical work to the costs. This doesn’t require formal research files for every project. In many businesses, especially small and middle-market companies, qualifying activity is documented through tools employees already use, including project plans, engineering notes, meeting notes, design files, change logs, and more.

This is especially important when employees wear multiple hats. While several leaders may contribute to qualifying work, their documentation may be scattered. That is not necessarily a deal breaker, but it means the credit study process should work with existing workflows rather than impose a new compliance structure later. A practical approach can help translate day-to-day business records into a supportable credit position without overwhelming essential business teams.

AI Is Changing How Companies Innovate

AI is changing how companies develop products, improve processes, analyze data, automate workflows, and deliver services. As AI becomes embedded in more business functions, companies may have new opportunities to identify qualifying research activities, particularly when developing proprietary tools, designing algorithms, building custom data pipelines, integrating complex systems, or resolving technical performance, scalability, reliability, or quality issues.

However, using AI does not automatically qualify a company for the R&D credit. The same IRS four-part test still applies: the research must involve domestic Section 174A expenditures, be technological in nature, support the development of a new or improved business component, and include a process of experimentation focused on improving function, performance, reliability, or quality.

For example, developing a proprietary model, evaluating model architectures, building custom data pipelines, or solving complex integration challenges may involve qualifying activities if the work meets the applicable requirements.

Real Savings Require Coordination

The R&D credit can reduce federal income tax liability, support cash flow, create refund opportunities, and, in some states, provide additional value through state credits. For eligible startups and small businesses, the ability to apply the R&D credit against certain payroll taxes can also help monetize qualifying research activity before the company has income tax liability. For established businesses, the opportunity may span multiple departments and locations, making value easy to miss when reviews focus only on job titles, accounting categories, or obvious projects.

For credit purposes, coordination matters because the strongest claims connect qualifying activities, business components, employees, and costs in a way that is both practical and supportable. The technical narrative, cost calculation, employee input, and tax return reporting should all tell the same story. Disconnects can create unnecessary risk or cause a company to understate an otherwise supportable benefit.

Cross-team collaboration is crucial to identify activities that may not be labeled “R&D” internally, such as process improvements, automation initiatives, manufacturing adjustments, software enhancements, product redesigns, or technical problem-solving performed for customer or market requirements.

A Practical Action Plan

• Name and track key projects. Identify projects involving technical challenges, design alternatives, testing, or problem-solving, and use consistent names or project codes to connect documentation and costs.
• Preserve ordinary course documentation. Determine where evidence already exists, such as project management tools, engineering files, emails, design records, and more. Retain the materials that show what was developed, what challenges arose, what alternatives were considered, and how issues were resolved.
• Connect people, activities, and costs. Work with project leaders to understand who was involved in research. This will matter more as Form 6765 reporting emphasizes business components and wage categories.
• Review AI and automation projects carefully. Separate technical development and experimentation from routine deployment of third-party tools. Document the uncertainty, alternatives tested, and technical decisions made.
• Coordinate early with tax advisors. Evaluate federal and state credits, amended return opportunities, and payroll tax credit eligibility before year-end, when records are easier to gather and planning options may be broader. Early coordination can also clarify which activities to pursue, exclude, and document.

Turning Innovation into Savings

The R&D tax credit remains valuable, but the process is becoming more disciplined. Waiting until tax filing season to reconstruct research activity may create challenges, but companies that build documentation into normal workflows can create a stronger, more defensible claim.

Connect with CBIZ to develop a practical approach to claiming R&D tax credits.