R&D Tax Credit - Sam Davenport, 1st Avenue Advisors

AIA Alabama Article on OBBBA July Deadline

1st Avenue Advisors - Sam Davenport (2.19.26)

July 6th Deadline for Architects to Capture 2022-2024 Tax Savings

Architecture has always been an innovation-driven profession. From performance-based façade systems to net-zero building strategies, today’s firms routinely solve complex technical problems under constraints of budget, code, site conditions, and sustainability demands. Yet many architecture firms still assume the federal R&D tax credit will not apply.

In most cases, that assumption is incorrect. In fact, a 2018 AIA study found that only 28% of Architecture firms were taking advantage of the credit. The percentage has certainly improved since that survey, but for firms that still have not claimed the credit, there is a temporary amendment window that expires on July 6, 2026. Failing to meet this window may result in a 75% or greater loss in value.

The 2025 Tax Bill and Why July 6, 2026 Matters

In 2022, legislation began requiring companies to amortize research and development (R&D) expenses over five years instead of deducting them immediately. This was commonly referred to as the Section 174 rule. For payroll-heavy industries like architecture, this was a painful reality as it dramatically increased tax in the immediate future with a promise of a net-zero effect gain across a 6-year timeline. For small to medium size architecture firms, many chose to forego the credit altogether instead of amortizing the R&D wage expenditures.

Over the last several years AIA has recognized the value this credit provides it’s members, and it has been a strong advocate for change to this section of the tax code. As a result of pressure from innovative U.S. companies and organizations like AIA, in 2025, Congress passed new legislation restoring immediate expensing of R&D costs for tax years beginning after December 31, 2024. That change is permanent going forward, and also created a 1-year amendment window to review past years.

Until July 6, 2026, companies with average annual gross receipts under $31 million (measured across 2022–2024) may amend 2022-2024 tax years without the amortization requirements. After that date, the ability to amend under those favorable rules expires. The credit itself does not disappear, but the immediate financial benefit may be materially reduced.

Architecture Firms Typically Qualify

The R&D tax credit is not limited to scientists and pharmaceutical companies. That’s a common

misconception around the credit. It applies to activities involving technical uncertainty, a process of experimentation, and reliance on engineering or scientific principles. Often, architects’ activities meet the rules to claim the R&D tax credit.

In architecture, qualifying activities frequently include:

• Designing to meet high-performance energy or LEED standards

• Developing new façade or envelope systems for climate control

• Iterative modeling for daylighting, ventilation, or spatial efficiency

• Exploring alternative structural configurations or materials

• Integrating building systems (MEP, structural) into constrained architecture

• Prototyping or refining spatial layouts to improve user flow or safetyAIA Alabama Article on OBBBA July Deadline

• Navigating zoning/code challenges with technical design adaptations

• Adaptive reuse and preservation with structural and performance constraints

Many firms dismiss eligibility because their work may seem routine, it is after all what they do every day. But the iterative nature of the Architectural process and the technical problem-solving common within projects often form the core of qualifying R&D activity.

What We Are Seeing in the Market

Over the last 6 months, AIA Alabama member and R&D specialist, 1st Avenue Advisors, saw an average tax savings of $256,000 across architecture, engineering, manufacturing, and software clients. If these same companies waited until after the amendment window closes this July, their savings would reduce to around $64,000 on average. The difference between pursuing the credit now and waiting is significant.

Timing Considerations

Firms that intend to evaluate this opportunity should realistically begin the process in early spring 2026 to comfortably meet the July 6 deadline. A comprehensive R&D study typically requires 4–8 weeks, depending on firm size and project complexity. Amended returns require additional preparation and filing time.

A Practical Recommendation

For firms already claiming the R&D credit, this deadline may not affect you. For firms that have considered it but still haven’t moved forward, the July 6, 2026 amendment window represents a meaningful inflection point. After that date, the opportunity will still exist, but the immediate financial impact could be significantly smaller. At a minimum, firm leaders should evaluate whether prior-year technical design activities qualify before the window closes.

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Sam Davenport

Principal, 1st Avenue Advisors

AIA Member Sam is a Principal at 1st Avenue Advisors, a specialized tax consulting firm comprised of Consultants and Tax Attorneys with over 100 years of experience serving the AEC industry. Sam serves as a technical resource for CPAs , CFOs, and business owners around the country, helping Architects, Engineers, Manufacturers and others navigate complex tax incentives like the R&D credit. AIA Alabama Article on OBBBA July Deadline

1st Avenue Advisors - Sam Davenport (2.19.26)

If you have questions about this article or how the contents of the article could apply to your

firm, Sam can be contacted at: Sam.Davenport@1staveadvisors.com