The New Form 6765: What CPAs Need to Know About Claiming the R&D Tax Credit

If you work with clients who claim the federal R&D tax credit, pay attention. There are big changes for the 2026 tax year.

The IRS revised the R&D tax credit Form 6765 in December 2024. This revision changed how certain taxpayers must report research and development expenses, shifting from high-level aggregate data to granular, business component-level disclosure.

For CPAs advising clients in manufacturing, software, pharma, engineering, and beyond, this matters.

Here’s what you need to know.

Why the IRS Overhauled Form 6765

The IRS laid the groundwork in 2021 when it issued a Chief Counsel Memorandum FAA20214101F. That memo required taxpayers filing amended returns to claim the R&D credit as a refund to attach a detailed statement identifying their business components, activities, individuals performing the activity, information sought to be discovered and expenses upfront with the amended return.

This was the IRS signaling where things were headed. The new Form 6765 takes that standard and extends it to certain taxpayers filing the credit on an original return.

The IRS is moving from simplified line items with expense to a detailed build out of R&D activity, business component by business component. This new form functions like a pre-audit risk screen, opening the door for reviews based on procedural errors.

What Changed: The Updates at a Glance

Here’s what changed and why it matters for your clients:

• Business Component Reporting (Section G). This is the biggest change.
  Under the old form, taxpayers reported R&D expenses in broad strokes.The new form requires identification of each business component, defined as any product, process, computer software, technique, formula, or invention on which qualifying research was conducted.

  For each business component representing the top 80% of your client’s total QRE, up to a maximum of 50 business components, the new form requires an increased level of detail that was not required before to file for the credit.

  The taxpayer needs to do more than name the business component. For each one, taxpayers must now provide the:

  • Business component type,
  • Name of the entity that conducted the research, and
  • Breakdown of QREs by:
    • Total wage QREs broken out by direct research wages, direct supervision wages, and direct support wages,
    • Cost of supplies,
    • Computer costs and software use, and
    • Contractor costs.

⇨ Note there is an exception to this reporting requirement for certain small businesses.

• Officer and Wage Disclosure: The form now requires specific disclosure of officer wages tied to R&D activity.
• Question on Acquisitions and Disposals: The new form asks if any major part of the business was acquired or sold during the year.
• Question on New QRE Expense Categories: If a taxpayer claims a new category of expenses as QREs for the first time, the historical base period used to calculate the credit has to be restated to include similar expenses, otherwise the credit may be overstated.
• ASC 730 Directive Usage: Large companies that report R&D expenses as a line item on their audited financial statements can use those figures as the basis for their credit claim rather than rebuilding QREs from scratch. This yes/no question tells the IRS the taxpayer used that method, which also affects what Section G reporting is required.
• Controlled Group Reporting: Controlled group members face additional reporting requirements under the new form.

Old vs. New Form 6765 | Section-by-Section Comparison

Section	Old Form 6765	New Form 6765	Compliance Lift
Section A (Regular Credit)	Standard Regular Credit calculation	Largely the same information shown. QRE data is now pulled from Section F below.	Low. Familiar territory.
Section B (ASC Method)	Standard ASC calculation	Largely the same information shown. QRE data is now pulled from Section F below.	Low. Familiar territory.
Section C (Current Year Credit)	Aggregates Section A or B result, adds pass-through credits	Largely unchanged.	Low. Familiar territory.
Section D (Payroll Tax Election or Credit)	Small businesses electing to apply research credit to payroll tax	Largely unchanged.	Low. Familiar territory.
Section E (Other Information)	Did not exist	New reporting information: A. Total number of business components B. Officer wages included in QREs C. Acquisitions / dispositions D. New expense categories E. ASC 730 Directive usage	Medium. New disclosure requirements. Biggest lift will be identifying the total number of business components.
Section F (Qualified Research Expenses Summary)	Did not exist as a standalone section. QREs were reported directly within Sections A and B.	New reporting format, but it’s information previously entered in Sections A or B on the old form.	Low. Familiar territory. Information previously reported on the old form.
Section G (Business Component Information)	Did not exist	New reporting information by business component. A. EIN of conducting entity B. Component name C. Component type D. Software classification (if applicable) E. Description of research purpose (for amended returns only) F. Direct research, supervision, support wages per component G. Supply costs H. Computer rental or lease costs I. Contract research costs	High. New disclosure requirements (with limited exceptions for small businesses). Most significant change on the form. More detail required than ever before.

What This Means Operationally for Your Clients

The IRS form update didn’t change what qualifies as good R&D documentation or the substantiation standards under IRC Section 41 haven’t moved. What changed is when that documentation must be provided.

Under the old form, taxpayers’ qualitative project records were kept defensively on file in case of an audit. They were never submitted with the return.

The new form flips that. Project descriptions, business component details, wage allocations by activity type, and expense breakdowns now have to be reported at filing. The audit file has become the tax return.

Companies who keep contemporaneous documentation as part of their regular course of business will find Section G far less disruptive than clients who don’t.

The most common problems aren’t that clients don’t have qualifying research. It’s that the documentation doesn’t exist at the level of detail Section G requires. That looks like:

• Wages coded to a department, not a project or business component.
• Wages not split by activity type. There is no breakdown of direct research, supervision, or support.
• No time tracking at all. Estimates were used in the R&D study, and there are little or no records to back them up.
• Supplies expensed to a general R&D account with no business component level breakdown.
• Contract research invoices tied to a deliverable, not a business component.

The documentation gap Section G exposes isn’t solved by tidying up the general ledger. Clients need a formal R&D credit study that defines their business components, maps their qualifying activities, and builds the expense detail the new form requires by coordinating across legal, engineering, and technical teams.

For taxpayers who haven’t done that work yet, here’s where to start:

• Run a data gap assessment. What project-level records exist? Where do the financials and technical documentation fail to align?
• Build contemporaneous procedures now. Retroactive reconstruction is harder to defend. Real-time record keeping is the more defensible approach, and it makes next year’s filing easier. Start developing procedures now to get to component level reporting.
• Get to component level. Clients reporting at the program or division level need to break that down to individual business components. This is the foundational work Section G requires.

Special Note on Section 174A of the OBBBA

One development worth noting for clients with qualifying R&D activity is the OBBBA’s new Section 174A. It restored immediate expensing of domestic R&D costs for tax years beginning after December 31, 2024, reversing the capitalization requirement that had been in place since tax year 2022.

Most taxpayers will benefit from modeling whether expensing or claiming the R&D tax credit produces the better outcome.

Where Things Go From Here

For taxpayers already tracking expenses at the business component level, tax year 2026 is business as usual.

For everyone else relying on broad and generalized expense level detail, the new Form’s requirements may require taxpayers to rethink how they document R&D expenses.

CTI works alongside CPAs to build and substantiate R&D credit claims that hold up at filing and under examination. If you have clients where Section G is raising questions, reach out for a complimentary consultation.