Manufacturer R&D Considerations for 2025 and Beyond

Innovation is the lifeblood of manufacturing. As a result, manufacturers must conduct research and develop new products, enhancements and production efficiencies on a regular basis to keep up with — or stay ahead of — competitors. The Federal Credit for Increasing Research Expenses, often referred to as the R&D Credit, can help offset some of the expenses associated with these efforts. While most manufacturers are likely quite familiar with the R&D Credit, there are a few key updates that manufacturers should keep top of mind in 2025 and beyond.

New Disclosures for Credit Claims

In January 2025, the Internal Revenue Service (IRS) published the final version of the R&D Credit Form 6765 following its draft release in December 2024, and earlier June 2024 proposed version. Key updates to the form include three new Schedules: E, F and G. 

Schedule E

The first of the new schedules includes a series of questions that commonly arise during R&D audits. It also seeks to clarify the number of business components generating the claimed Qualified Research Expenses (QREs). 

Schedule F

Schedule F is required for manufacturers not completing the optional Schedule G. It is used to report total amounts of QREs by category and is nearly identical to the old version of the form. 

Schedule G

This schedule is optional to complete in 2024 but will be required for the 2025 tax year. It should be noted that Schedule G is mandatory for qualified small business taxpayers that elect to claim the research credit against payroll taxes as well as taxpayers that, on a controlled group basis, report $1.5 million or less of QREs and gross receipts of $50 million or less. 

Whether you are completing Schedule G this year or next, it requires taxpayers to list their research projects by business component, including a short description