NEWS | Fall Legislative Preview: Small Business is Coming to Town

LEGISLATIVE PREVIEW: Congress is back from its summer break, and NSBA comes to town next week to urge continued work on small-business Priority Issues as part of its annual fly-in.

SEPT. 04 | Congress has returned from its August Recess, just in time for NSBA's annual fly-in known as Washington Presentation (WP). In addition to our members and the WP Advocates fighting for action on NSBA's Priority issues, America's most important economic community is looking forward to discussing the following topics at the top of the Chambers' lists:

President Trump's Signature Legislation

The One Big Beautiful Bill Act (OBBBA) made important changes to the research & experimental (R&E) cost recovery regime, namely the ability for small businesses to claim certain new benefits on a retroactive basis.

However, since the bill’s enactment, there remains looming questions on how the filing process would work, especially when it comes to both returns already filed and those still on extension. This raises the possibility of confusion and, ultimately, delays in accessing what will amount to a cash infusion for eligible companies. Fortunately, new guidance published by the IRS last week largely puts those concerns to rest and lays out a clear set of rules for affected companies. 

Additionally, as a result of the 2017 tax reform bill, starting in 2022, R&E costs have been required to be amortized over a 5-year period (15 years for foreign research), rather than written off in full in the year in which they are incurred.

Thanks, in part, to NSBA members urging Congress to act on this change, the OBBBA permanently reverts back to the “full expensing” standard for all costs incurred starting in 2025, and specifically for small businesses allows the treatment to be applied retroactively going back to 2022. 

The IRS’ Rev. Proc. 2025-28, published last week, explains how to implement this shift, especially for “small-business taxpayers," or those with gross receipts under $31 million.

In a nutshell, eligible small businesses are able to receive a special retroactive option for 2022 through 2024, able to attach a one-time statement to their 2024 return to “early adopt” the new Section 174 expensing regime (and amend 2022–2023 for consistency) without having to complete the burdensome Form 3115 “Application for Change in Accounting Method.” 

There’s also relief for already-filed 2024 returns, with many now able to file a superseding return by September 15, 2025. An outside date to submit related amendments generally through July 6, 2026. 

Finally, and, perhaps, most importantly, when it comes to outstanding questions, those on extension do not need to file and then immediately amend. The new guidance confirms small-business owners can take advantage of the election when they file the extended return. 

The two key takeaways are as follows: 

First, Congress designed the retroactive expensing option as a cash lifeline for small businesses, and IRS built in multiple paths to make sure companies can access it.

Second, navigating retroactive relief paired with the switch from amortization to expensing carries inherent complexity, and businesses should work with a qualified tax professional to determine the best approach.

SBIR/STTR Action for NSBA, SBTC

On a streak on support from Congress, NSBA's Small Business Technology Council (SBTC) was able to, this week, secure support for a 1-year extension of the critical Small Business Innovation Reach and Technology Transfer Programs (SBIR/STTR programs) in the form of an introduced bill from House Small Business Committee Chairman Roger Williams (R-Texas).

This new legislation comes as negotiations continue between the "Six Corners (6C)," entailing the Majority & Minority leaders in each of the House and Senate Small Business Committees, as well as the House Science Committee. On an unfortunate trajectory thus far, the 6C have yet to be able to reach a consensus on a long-term SBIR/STTR extension, with the Democrats and Republicans each releasing competing bills with sizable gaps in their respective terms.

Since it appears unlikely the residents of 6C will come to an agreement before September 30 when federal funding is set to expire, a continuing resolution (CR) with provisions funding SBIR/STTR programs throughout continued deliberations would be a welcome relief to small businesses who participate and are reshaping critical technology developed with the resources.

NSBA and SBTC applaud Chair Williams for his initiative in taking steps to ensure these vital innovation programs do not lapse while negotiations continue.

While there appears to be growing, broad support in the House for this prospective plan, a CR extension would need to be taken up by the Senate and passed.

NSBA and SBTC urge both Chambers to quickly pass this common-sense subsidy solution to extend the programs, ultimately prioritizing small business and providing Congress the time it needs to come to an agreement on a long-term bill.

Follow NSBA as we continue tracking these important issues, and follow our members as they sit down one-on-one with Congress next week during Washington Presentation - America's Small Business Fly-In.