Law Updates

R&D, 179D, and Cost Seg Law Updates

Federal and state changes that affect R&D credits, 179D, and cost segregation, each dated and linked to the law or guidance it came from. The dates coming up next are at the top.

Last updated October 26, 2026Reviewed every month

Coming up next

19 updates

Coming up

Nov 12, 2026Federal
R&D creditComing up

First part of the new federal hemp definition takes effect

Products containing cannabinoids that the cannabis plant cannot naturally produce are excluded from the federal definition of hemp starting November 12, 2026. A September 2026 law delayed the rest of the new definition to December 11, 2026.

Who it affectsMakers and sellers of hemp-derived products containing cannabinoids the plant cannot naturally produce.
What it meansProducts outside the hemp definition are treated as marijuana under federal law, which changes their federal tax treatment, including R&D credit eligibility.

Sources: Public Law 119-37, Division B, Section 781 · Continuing Appropriations and Extensions Act, 2027, Section 2019 (H.R. 6500)

Related: R&D tax credits for cannabis and hemp

Dec 11, 2026Federal
R&D creditComing up

New federal hemp definition takes effect

Hemp is measured by total THC, including THCA, at no more than 0.3% on a dry weight basis. Final products with more than 0.4 milligrams per container of total THC and similar cannabinoids fall outside the definition, as do products with naturally occurring cannabinoids made or converted outside the plant, such as delta-8 THC made from CBD. Industrial hemp grown for fiber, seed, or oil is named in the definition.

Who it affectsHemp growers, processors, and hemp-derived product brands.
What it meansProducts that no longer meet the definition are treated as marijuana under federal law, which affects R&D credit eligibility. The funding law that set this date also expires December 11, and bills to delay or change the definition are pending.

Sources: Public Law 119-37, Division B, Section 781 · Continuing Appropriations and Extensions Act, 2027, Section 2019 (H.R. 6500)

Related: R&D tax credits for cannabis and hemp

Jan 1, 2027Federal
179DComing up

179D moves to the ASHRAE 90.1-2019 reference standard

Qualifying lighting, HVAC, and envelope work placed in service in 2027 or 2028 is measured against ASHRAE Standard 90.1-2019 instead of 90.1-2007. Work whose construction began before January 1, 2023 keeps 90.1-2007 no matter when it is placed in service.

Who it affectsBuilding owners and designers with projects that began construction by June 30, 2026 and finish in 2027 or 2028.
What it meansThe 2019 reference building is more efficient, so the same building shows smaller savings against it. Design choices still being made can decide whether a project qualifies.

Source: IRS Announcement 2024-24

Related: 179D Deduction Calculator

Jan 1, 2029Federal
179DComing up

179D moves to the ASHRAE 90.1-2022 reference standard

Qualifying work placed in service after December 31, 2028 is measured against ASHRAE Standard 90.1-2022, unless its construction began before January 1, 2023.

Who it affectsLarge or phased projects that began construction by June 30, 2026 and will finish in 2029 or later.
What it meansThis will be the strictest standard 179D has used. Projects in this group need a closer look early, while design decisions can still change the result.

Source: IRS Announcement 2024-24

Related: 179D energy deduction

Watching

Latest: Oct 22, 2026Federal
R&D creditWatching

Rescheduling of all marijuana to Schedule III

A DEA hearing on moving all marijuana, including adult-use, to Schedule III ran from June 29 to July 15, 2026. The judge paused the case on September 29 over a new GAO report. On October 22 he admitted the report, denied a request to reopen the hearing, and allowed limited briefs on the report due October 29, with replies due November 5. A recommendation to the DEA Administrator follows, then a final decision.

Who it affectsAdult-use cannabis operators and the businesses that serve them.
What it meansAdult-use cannabis remains in Schedule I, so Section 280E still applies to it. We update this entry and our cannabis guidance when a decision is published.

Sources: DEA, Stay and Briefing Order (September 29, 2026) · DEA, Order of October 22, 2026

Related: R&D tax credits for cannabis and hemp

Recent changes

Jul 6, 2026Federal
R&D creditDeadline passed

Small business election to apply Section 174A to 2022 through 2024 closed

Smaller businesses could elect to deduct domestic research costs from 2022 through 2024 on amended returns, and make a late election to take a reduced R&D credit for those years. Both elections had to be filed by July 6, 2026, or by the earlier refund deadline for 2022.

Who it affectsBusinesses with average annual gross receipts of $31,000,000 or less that capitalized research costs from 2022 through 2024.
What it meansThat election window is closed. The R&D credit itself can still be claimed for any year that remains open for amendment.

Source: IRS Rev. Proc. 2025-28

Related: R&D tax credit

Jul 1, 2026Nebraska
R&D creditStateIn effect

Nebraska ends cash refunds of its R&D credit

Starting July 1, 2026, the Nebraska R&D credit can be used only against Nebraska income tax or to obtain a refund of Nebraska sales and use tax paid. The option to claim it as a refundable credit on an income tax return was repealed.

Who it affectsNebraska companies that relied on the cash refund, especially those with little Nebraska income tax.
What it meansThe credit still has value, but how it is used changes, and the timing of a claim matters more.

Source: Neb. Rev. Stat. § 77-5804, as amended by LB 901 (2026), Section 37

Related: Nebraska R&D credit profile

Jun 30, 2026Federal
179DDeadline passed

179D construction start deadline passed

The 179D deduction is not allowed for property whose construction begins after June 30, 2026. Qualifying work that began construction by that date keeps its path to the deduction, even if it is placed in service years later.

Who it affectsBuilding owners and designers with lighting, HVAC, or envelope work.
What it meansProjects that started on time can still be claimed, and evidence of when construction began now carries real weight.

Sources: Public Law 119-21 (One Big Beautiful Bill Act) · IRS FAQs, FS-2025-05

Related: 179D energy deduction

Apr 28, 2026Federal
R&D creditIn effect

State-licensed medical marijuana moves to Schedule III

A Justice Department rule placed FDA-approved marijuana products and marijuana subject to a state medical marijuana license in Schedule III, effective April 28, 2026. Adult-use marijuana was not included.

Who it affectsState-licensed medical cannabis businesses and companies that serve them.
What it meansTreasury and the IRS have said rescheduling generally removes Section 280E as a bar to deductions and credits for state-licensed medical operators, starting with the full tax year that includes April 28, 2026. Formal guidance is still pending.

Sources: Federal Register, 91 FR 22714 · U.S. Treasury statement (April 23, 2026)

Related: R&D tax credits for cannabis and hemp

Feb 20, 2026Federal
Cost segregationIn effect

New 100% deduction for qualified production property

IRS Notice 2026-16 gives interim guidance on an elective deduction of 100% of the basis of nonresidential real property used as an integral part of manufacturing, production, or refining. Construction must begin after January 19, 2025 and before January 1, 2029, and the property must be placed in service after July 4, 2025 and before January 1, 2031.

Who it affectsManufacturers, producers, and refiners building or expanding U.S. production facilities.
What it meansProduction space in a new plant can be deducted in the first year, beyond the components a cost segregation study reclassifies. Offices, storage of finished goods, and research space do not qualify.

Source: IRS Notice 2026-16

Related: Cost segregation

Jan 14, 2026Federal
Cost segregationIn effect

IRS issues guidance on permanent 100% bonus depreciation

Notice 2026-11 explains which property qualifies for the permanent 100% first-year depreciation deduction for property acquired after January 19, 2025, and lets taxpayers rely on the existing bonus depreciation regulations until proposed regulations are published.

Who it affectsOwners who bought, built, or improved commercial or rental property after January 19, 2025.
What it meansComponents a cost segregation study moves into 5, 7, and 15-year categories can be deducted in full in the first year.

Sources: IRS Notice 2026-11 · IRS news release IR-2026-06

Related: Cost segregation

Jan 1, 2026Federal
R&D creditIn effect

Form 6765 Section G becomes required

For tax years beginning after December 31, 2025, most R&D credit claims must report business component information in Section G of Form 6765. Two groups are exempt: qualified small businesses taking the payroll tax election, and original returns with $1,500,000 or less in qualified research expenses (measured at the controlled group level) and average annual gross receipts of $50,000,000 or less for the prior three years.

Who it affectsCompanies claiming the federal R&D credit above those thresholds.
What it meansProject-level detail now goes on the form itself, so documentation has to be organized by project from the start.

Source: IRS Instructions for Form 6765 (Rev. December 2025)

Related: R&D tax credit

Jan 1, 2026Texas
R&D creditStateIn effect

Texas replaces its R&D credit and ends the sales tax exemption

A new Texas franchise tax R&D credit took effect January 1, 2026 with a higher rate, a simpler base tied to federal research expenses, and a refund option for entities that owe no franchise tax. The R&D sales tax exemption was repealed.

Who it affectsCompanies doing research in Texas, including those that used the sales tax exemption.
What it meansMany Texas companies get a larger credit, and some that owe no franchise tax can now receive it as a refund.

Sources: Texas Legislature, SB 2206 (89th Legislature) · Texas Comptroller

Related: Texas R&D credit profile

Oct 9, 2025Federal
179DIn effect

IRS sets 2026 179D deduction rates

For tax years beginning in 2026, the deduction runs from $0.59 to $1.19 per square foot, or $2.97 to $5.94 per square foot when prevailing wage and apprenticeship requirements are met.

Who it affectsBuilding owners and designers claiming 179D on 2026 tax returns.
What it meansRates rise with each percentage point of energy savings above 25%, up to the year's maximum. Meeting prevailing wage and apprenticeship requirements raises the rates fivefold.

Sources: IRS Rev. Proc. 2025-32, Section 4.25 · IRS news release IR-2025-103

Related: 179D Deduction Calculator

Aug 28, 2025Federal
R&D creditIn effect

IRS issues procedures for Section 174A

Rev. Proc. 2025-28 explains how to deduct domestic research costs under Section 174A, how to recover 2022 through 2024 costs that were still being amortized, and how smaller businesses could apply the new rules to earlier years.

Who it affectsAny business with U.S. research costs, and the CPAs preparing their returns.
What it meansRemaining 2022 through 2024 domestic research costs can be deducted in 2025, or split over 2025 and 2026.

Source: IRS Rev. Proc. 2025-28

Related: R&D tax credit

Jul 4, 2025Federal
R&D creditIn effect

Domestic research costs are deductible again in the year incurred

The One Big Beautiful Bill Act added Section 174A, which restores the immediate deduction of domestic research and experimental costs for tax years beginning after December 31, 2024. Foreign research costs are still amortized over 15 years.

Who it affectsAny company with U.S. research costs, especially those that stopped claiming the R&D credit after 2022.
What it meansDomestic research costs no longer have to be amortized over five years, which removes a cash-tax cost that discouraged some companies from claiming the credit.

Source: Public Law 119-21, Section 70302

Related: R&D tax credit

Jul 4, 2025Federal
Cost segregationIn effect

100% bonus depreciation made permanent

The One Big Beautiful Bill Act made the 100% first-year depreciation deduction permanent for qualified property acquired after January 19, 2025, ending the scheduled phase-down.

Who it affectsOwners of commercial and rental property acquired, built, or improved after January 19, 2025.
What it meansCost segregation produces its largest first-year deductions when bonus depreciation is at 100%.

Source: Public Law 119-21 (One Big Beautiful Bill Act)

Related: Cost segregation

Jul 4, 2025Federal
179DIn effect

179D given an end date

The One Big Beautiful Bill Act ended the 179D deduction for property whose construction begins after June 30, 2026. Before the act, 179D had no end date.

Who it affectsBuilding owners and designers planning lighting, HVAC, or envelope work.
What it meansWork that began construction by June 30, 2026 can still qualify whenever it is placed in service.

Source: Public Law 119-21 (One Big Beautiful Bill Act)

Related: 179D energy deduction

Jan 1, 2025California
R&D creditStateIn effect

California adds the alternative simplified credit

For tax years beginning in 2025 and later, California conformed to the federal alternative simplified credit method and repealed its alternative incremental credit.

Who it affectsCompanies with research in California, especially those whose regular-method base produced little or no credit.
What it meansMany California companies that got nothing under the regular method now have a credit to claim.

Sources: FTB 3523 instructions (2025) · California Franchise Tax Board

Related: California R&D credit profile

Each entry links to the law, IRS guidance, or state source it is based on. This page is a summary for planning, not tax advice. Whether a change applies to you depends on your facts, and that is what a discovery call is for. See our glossary for unfamiliar terms.

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