Form 6765 Section G Is Mandatory for 2026: What R&D Credit Claimants Must Report Now

Key takeaways

• Section G is mandatory for tax years beginning after December 31, 2025. It was optional for tax year 2024 (IR-2024-171, June 21, 2024) and stayed optional for tax year 2025 (IR-2025-99, October 1, 2025). Calendar-year 2026 is the first required year; there is no further grace period in the December 2025 instructions.
• The 80%/Top-50 rule sets the disclosure floor. Report at least 80% of total QREs by business component, listed in descending order by QRE amount, but no more than 50 components. Everything beyond that threshold is reported on a single "Aggregate Business Components" line.
• Each component carries identifying data plus a six-way expense split. For every listed component, report the conducting entity's EIN, principal business activity code, component name or identifier, component type (Product, Process, or All Others), and software classification where applicable — then QREs broken into in-house wages for direct research, direct supervision, and direct support; supplies; computer rental/lease; and contract research.
• Only two exceptions remain. Qualified small businesses under §41(h)(3) electing the reduced payroll-tax credit are excused, as are filers whose controlled-group QREs are $1.5 million or less and average annual gross receipts for the prior three years are $50 million or less — but only when claiming the credit on an originally filed return.
• The amended-return perfection period runs through January 10, 2027. Taxpayers retain 45 days to perfect a research-credit refund claim after IRS notice and before a final determination.

What the redesigned form now demands

The IRS rebuilt Form 6765, *Credit for Increasing Research Activities*, and the consequential change is Section G. For years, taxpayers computed a single §41 credit number from aggregated wage, supply, and contract-research totals and attached a workpaper only if examined. Section G moves that substantiation onto the return itself, at the business-component level that §41(d) has always defined the credit around.

A business component, under §41(d)(2)(B), is any product, process, computer software, technique, formula, or invention the taxpayer holds for sale, lease, license, or use in its trade or business. Section G forces you to enumerate them.

The 80%/Top-50 rule in practice

Rank components by QRE size, list from largest down until you have covered 80% of the total or hit 50 components — whichever comes first — and sweep the remainder into one aggregate line. A company with research concentrated in a handful of products will satisfy the 80% threshold with a short list. A company with research diffused across hundreds of small projects may hit the 50-component cap well before 80% and rely on the aggregate line for the rest. Either way, the top of the distribution is now disclosed in detail.

What each component line contains

For each listed business component, columns 49(a) through (e) capture the EIN of the entity that conducted the research, the principal business activity code, the component name or identifier, the component type (Product, Process, or All Others), and — for software — its classification (internal-use software, dual-function software, an excepted category, or non-internal-use). (Column 49(f) is required only when the credit is claimed on an amended return that adds or increases a §41 credit relative to the original return.) Columns 50 through 56 then decompose the QREs:

• in-house wages for employees actually conducting research;
• in-house wages for direct supervision of research;
• in-house wages for direct support of research;
• total qualified wages (the sum of the three);
• supplies;
• computer rental or lease costs; and
• contract research expenses.

That breakdown is not arbitrary. It mirrors the QRE categories in §41(b) — in-house research expenses (wages and supplies under §41(b)(2)) and contract research expenses (§41(b)(3), generally limited to 65% of amounts paid) — and it is the same decomposition the IRS uses to test credits in examination.

Section G converts the credit from a single computed number into a component-by-component disclosure — the same substantiation the IRS has long demanded in audit, now required on the face of the return.

Who is excused, and who is not

The December 2025 instructions preserve exactly two exceptions. First, a qualified small business as defined in §41(h)(3) that has checked the box to claim the reduced payroll-tax credit is not required to complete Section G. Second, a taxpayer is excused if total QREs determined at the controlled-group level are $1.5 million or less, average annual gross receipts for the prior three tax years are $50 million or less, and the research credit is being reported on an original return.

Read the second exception carefully. The QRE test is measured at the controlled-group level, not the single-entity level, so commonly controlled affiliates aggregate for the $1.5 million ceiling. The gross-receipts test looks to the prior three-year average. And the exception applies only on an original return — a taxpayer claiming or increasing the credit on an amended return cannot use it and must complete Section G regardless of size.

The amended-return refund claim track

Separate from Section G's return-level reporting, the IRS maintains an administrative regime for research-credit refund claims on amended returns, which requires identifying business components, the research activities performed, who performed them, and the information sought to be discovered. In IR-2025-99 (October 1, 2025), the IRS extended the transition period for these claims through January 10, 2027, preserving the 45-day window to perfect a deficient refund claim after IRS notice and before a final determination. Refund claimants therefore face component-level substantiation on two fronts: the new Section G on the return and the long-standing refund-claim documentation requirements.

Why this lands hard now

The timing compounds the stakes. The mandatory §174 capitalization in effect since 2022 raised the §41 credit's relative value during the years when research expenditures could not be currently expensed; even after §174A restored immediate expensing of domestic research expenditures for tax years beginning after December 31, 2024 (with foreign research still subject to 15-year amortization under §174), the credit remains a high-value, frequently examined benefit. A valuable credit, now substantiated on the face of the return, is also more easily challenged when the disclosure is thin. A 2026 return with an incomplete or internally inconsistent Section G gives an examiner a roadmap; on the amended-return side, it invites disallowance of the refund claim. Aggregate-level R&D tracking — by department, cost center, or general ledger account — will not produce the component-level QRE detail the form demands.

Frequently asked questions

Do we have to complete Section G on our 2025 return?

No. Section G is optional for tax year 2025 (processing year 2026), per IR-2025-99. It becomes mandatory for tax years beginning after December 31, 2025. For calendar-year filers, the 2026 return filed in 2027 is the first required year. Completing Section G voluntarily on the 2025 return is permitted and is a reasonable dry run.

We have hundreds of small R&D projects. Do we list every one?

No. List business components in descending order by QRE until you have covered at least 80% of total QREs or reached 50 components, whichever comes first, then report the balance on a single aggregate line. You are never required to list more than 50 components.

Our QREs are under $1.5 million. Are we automatically exempt?

Only if you also meet the gross-receipts test and file on an original return. The exemption requires controlled-group QREs of $1.5 million or less, average annual gross receipts of $50 million or less for the prior three years, and an originally filed return. Fail any one of those conditions — for example, by claiming the credit on an amended return — and Section G is required.

How does Section G relate to the documentation already required for amended-return refund claims?

They are distinct but overlapping. Section G is a return-level disclosure on Form 6765 itself. The refund-claim requirements are a procedural condition for a valid §41 refund claim on an amended return, with a perfection period now extended through January 10, 2027. A refund claimant must satisfy both.

Bottom line

Treat the 2025 filing season as your last rehearsal. Before any tax year beginning in 2026 closes, confirm that your R&D tracking captures QREs at the business-component level and splits each component's costs into direct-research wages, supervision wages, support wages, supplies, computer costs, and contract research — the exact buckets Section G requires. Rank your components by QRE now, identify which carry the top 80%, and pressure-test the conducting-entity EINs and component types you will report. If you intend to claim on an amended return, do not assume the small-filer exception applies, and calendar the January 10, 2027 perfection deadline. The credit is worth more than it was; so is the discipline of substantiating it correctly the first time.