Form 6765 Section G Becomes Mandatory in 2026: What It Means for Your R&D Tax Credit Documentation
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The IRS has finalized major updates to Form 6765 (Credit for Increasing Research Activities), the form used to claim the R&D tax credit. The headline change, detailed project-level reporting under new Section G, becomes mandatory starting with tax year 2026 (returns filed in 2027). Section G has been optional throughout 2024 and 2025 while the IRS collected stakeholder feedback. That transition period is ending.
What Will Be Required for Your R&D Tax Credit Claim, Per Business Component
- A list of each qualifying business component or project.
- Qualified research expenses (QREs) tied to each component, with wage QREs split into direct research, direct supervision, and direct support categories.
- Whether any acquisitions or dispositions occurred during the year (now a dedicated checkbox in Section E).
- A narrative description of the information sought to be discovered, and the alternatives evaluated during the process of experimentation, for each component.
This is a marked departure from the historical form, which required only aggregate, quantitative figures: costs and election choices, with no project-level narrative.
What Will Be Required for Your R&D Tax Credit Claim, Per Business Component
- A list of each qualifying business component or project.
- Qualified research expenses (QREs) tied to each component, with wage QREs split into direct research, direct supervision, and direct support categories.
- Whether any acquisitions or dispositions occurred during the year (now a dedicated checkbox in Section E).
- A narrative description of the information sought to be discovered, and the alternatives evaluated during the process of experimentation, for each component.
This is a marked departure from the historical form, which required only aggregate, quantitative figures: costs and election choices, with no project-level narrative.
Technical Points Worth Flagging for R&D Tax Credit Filers
- Reporting cap, not full disclosure: components only need to be detailed, in descending order of cost, until reaching 80% of total QREs, capped at 50 components.
- Small-filer exemption: Section G doesn’t apply to Qualified Small Businesses (IRC §41(h)(3)) electing the reduced payroll tax credit, or to filers with QREs ≤ $1.5M and average gross receipts ≤ $50M over the prior three years (measured at the controlled-group level).
- Amended returns are treated differently. Regardless of exemptions above, amended returns and AARs claiming the R&D tax credit must complete Section G, per the 2021 Chief Counsel Memorandum (20214101F).
- Section 174A overlay: the final instructions incorporate One Big Beautiful Bill Act (OBBBA) changes to domestic research and experimental expenditure treatment under new §174A, which interacts with how the R&D tax credit and capitalized R&E costs reconcile.
- Controlled groups: for members filing separately, the 80% / Top-50 threshold applies at the individual entity level, not the aggregated group, a nuance that has caused filing errors in practice.
Contact KBF
Claiming the R&D tax credit itself isn’t necessarily complex line-by-line. But the aggregate lift of tracking, coding, and narrating R&D activity at the project level throughout the year is significant, particularly for companies running many concurrent R&D projects without existing time-tracking or project-level cost allocation systems. Waiting until filing season to build this data trail for your R&D tax credit will likely be too late.
If you have questions about how these changes to Form 6765 may affect your R&D tax credit filing or want help getting ahead of the new documentation requirements, connect with us or contact Brian Applebaum directly at bapplebaum@kbfadvisory.com