I doubt if this will make much difference. Offshoring as a tactic emerged in the pandemic when companies realised that being “remote” works just as well.
Sure, foreign R&D still gets amortized over 15 years (NPV ≈59 % of a full write-off, so you “lose” ~8.6 % of your R&D spend in present-value terms, and only 6.7 % of the cost is deductible in year 1, creating a 19.6 % cash-tax gap).
But offshore wages are often 50–70 % below U.S. rates:
• Even after the slower amortization drag, hiring at half the cost nets you ~30 % total savings on R&D headcount.
• On a pure cash basis you only need ~20 % lower wages to break even; most offshore markets easily exceed that.
• So the labor-cost arbitrage far outweighs the tax timing penalty unless your foreign salaries are less than ~20 % below U.S. levels.
In short: the 15-year amort rule hurts your tax deduction, but 50 %+ lower offshore wages more than make up for it.
BobbyJo · 35m ago
This ignores the other financial and non-financial costs of offshoring: legal, cultural, temporal... a lot of the time, those close the gap.
On paper, offshoring has made sense the entire time, and yet here we are in 2025 and companies still hire American devs. Not only that, they often fly in foreign devs just to pay them more here than if they had just offshored to their home country.
__loam · 29m ago
Yeah people have been offshoring then onshoring once they realize offshoring sucks since at least the 90s. I remember my dad, who was also a software dev, complaining about it 20 years ago. It always swings back. The network effect in huge hubs like SF and NYC is massive.
eric-burel · 22m ago
If I read properly this is explicitely targeting UE, Canada, UK and other countries with high wages and R&D and software engineering capabilities.
n_u · 6h ago
It also classifies software development as R&D which together with immediate expensing for R&D undoes the Section 174 changes as far as I understand.
“For purposes of this section, any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure“
> there shall allowed as a deduction any domestic research and experimental expenditures which are paid or incurred by the taxpayer in the current taxable year
AFAIK, there was no domestic vs. foreign R&D distinction in section 174 before.
mjoin · 51m ago
That's nuts
charlieyu1 · 10m ago
This bill is so random. The poker world is going doom and gloom when BBB limits the amount of gambling loss deductibles to 90% of gambling wins.
ttul · 2h ago
Meanwhile, in Canada, not only can you expense R&D, but there is a cashable tax refund that will give you back about 60% of your developers’ salaries…
nickff · 55m ago
You can only expense Canadian R&D expenses; meaning anything that is not completely used up almost immediately is treated as an asset. This makes almost no difference for software development, but is very important (and disadvantageous) in more capital-intensive industries.
Galanwe · 44m ago
There is something similar in France, the Crédit Impôts Recherche (CIR), I remember it was around 50%. I've heard it's going to disappear though, there were abuses.
forty · 1m ago
"There are abuses" is really an understatement. "It's mostly abuse and there might be some legitimate beneficiaries" would be more correct.
eric-burel · 31m ago
Hi, CIR expert here, it's well and alive. There has been a communication push against it last year but relatively over.
It's 30% of R&D expenses as a tax cut.
Update: I think the 50% you mention is related to non salary expenses CII = a smaller similar system for innovation, which we differentiate from R&D. CII used to cover non salary expenses with a 50% forfait but this part has been removed indeed. It still covers 20% of salary expanses.
anovikov · 56m ago
So it means that indirectly, developers' salaries are not a taxable income in Canada if they are working on R&D? Meaning, they do pay taxes on their income, but their employer gets those taxes back, so if tax is 60%, the employer could pay 250% of what they'd pay otherwise, get 150% back, then the developer pays 150% of taxes, and gets 100%, so in effect the salary is tax-free. Is that what you meant to say?
If so, it sounds almost too good to be true. Why aren't all startups in Canada?
Canada · 35m ago
Yeah, I never thought of it that way. Your plan sounds great, but, in practice how it works is you get paid about half of what you would get in the US. Currently less than half due to the unusual currency exchange rates.
nickff · 52m ago
There are many limits on SR&ED, and the reporting/auditing process is burdensome. Canada also suffers from a variety of other inconveniences, mostly related to its dependence on resource extraction-related industries.
throwawaysleep · 49m ago
Canada's lack of startups is heavily cultural.
We adopt new products less. We are far more risk averse about purchasing goods or services from startups, far more risk averse about funding them (founders often give personal guarantees to get the investment), value the equity startups offer at far less, etc. Government is far more fussy about accountability with that refundable R&D money, so lots of time is spent filling out paperwork and hiring consultants to do it.
Here is a video that explains a lot about Canadian purchasing:
I hate to see this, but you’re comparing two completely different systems.
Like it or not, but Canada is much more “socialist”, you can’t expect it in any case to be like US or viceversa.
agwa · 4h ago
As a small software business owner, I have to agree with Michele Hansen (who spent 2 years advocating on behalf of small software businesses for this very change): "we’re finally going to get Section 174 relief, and I couldn’t be angrier" https://www.linkedin.com/posts/mjwhansen_it-looks-like-were-...
benreesman · 1h ago
Yeah. This is a tough one. Its a really bad bill that happens to also be the best thing that could happen in the economic life of most any programmer.
This is going to make a lot of people's lives a lot worse and I'm against it even though it's an absurd windfall for me and people like me.
doctorpangloss · 58m ago
Not sure if this is an absurd windfall... It aligns software developers with the guild professionals, like dentists and lawyers, who had an economically equivalent benefit via S corp distributions. Except to get this one, you have to pay a royalty to someone to write your technical narrative.
benreesman · 55m ago
I got more inbound recruiter email in the last week than in the two years up until last week.
Everyone's BATNA just skyrocketed. What you choose to do with a huge surge in your pricing power is up to you, but you have it.
yieldcrv · 4h ago
I disagree, every rider was independently lobbied for and the outcome would be the same if passed separately by Congress or as a rider in a larger bill like it was.
There is no reason to have cognitive dissonance over it.
edaemon · 3h ago
If every rider was independently proposed the outcome wouldn't be the same, reconciliation wouldn't apply and 60 Senate votes would be required to pass them.
yieldcrv · 3h ago
decent point
two counteracting forces:
The senate parliamentarian decided they could be in the reconciliation bill
and outside of the reconciliation bill, believe it or not, Congress does pass other bills over the 60 senate vote threshold
This R&D one would be a decent candidate
acheron · 4h ago
It proves they never actually cared in the first place, it’s just arguments as soldiers.
lsllc · 5h ago
Looks like prior years can be caught up with:
> Companies with capitalized domestic R&D expenses from 2022–2024 can elect a catch-up deduction, which could significantly improve cash flow for firms engaged in innovation.
jofzar · 2h ago
So this is going to get all those jobs back that people have been layed off for right? Right?
nine_k · 2h ago
Hiring software engineers is going to become less expensive. So likely there's going to be more jobs on the market, and maybe better jobs.
But when a forest is cut, usually a new forest that grows on that place looks different.
supportengineer · 2h ago
Reversion to the mean
coliveira · 2h ago
Of course not.
tomrod · 5h ago
If correct, this is a good thing on a generally bad, overstuffed bill. Immediate expensing never should have been changed in the first place, and it was always weird seeing people twist themselves in knots defending it.
xp84 · 5h ago
It’s an overstuffed bill because nobody will compromise on anything so the only way to pass a bill that has anything even remotely controversial to either party is one reconciliation bill a year.
dragonwriter · 5h ago
> It’s an overstuffed bill because nobody will compromise on anything so the only way to pass a bill that has anything even remotely controversial to either party is one reconciliation bill a year.
No, and lots of controversial bills have passed other than as reconciliation bills, and especially so during trifectas where they "controversial" within the minority party but broadly supported by the majority; reconciliation is necessary to pass something that strains unity in the majority party and is uniformly opposed by (not "controversial to") the minority party, perhaps.
cheriot · 4h ago
In the last 10 years, have there been more than a handful of bills that got 60 votes in the senate?
I wouldn't like what the current congress would do without the filibuster, but at this point a paralyzed system might be worse.
apsec112 · 4h ago
"Despite Democrats holding thin majorities in both chambers during a period of intense political polarization, the 117th Congress (2021-2023) oversaw the passage of numerous significant bills, including the Inflation Reduction Act, American Rescue Plan Act, Infrastructure Investment and Jobs Act, Postal Service Reform Act, Bipartisan Safer Communities Act, CHIPS and Science Act, Honoring Our PACT Act, Electoral Count Reform and Presidential Transition Improvement Act, and Respect for Marriage Act."
All of these except the first two were bipartisan and got 60 Senate votes (or more)
It does seem like things are trending toward less public laws passing over the last decade, as well as record low time in session and other congressional activity.
margalabargala · 2h ago
Absolutely. Many bills in the Senate in that time have gotten over 90. Here's one that passed 95-2 that I picked at random.
A lot of what happens in Congress is obvious to do and everyone agrees. While the media certainly focuses on the handful of things the two parties are at odds over, most of the lawmaking done by Congress is not controversial between parties, and is simply passed, so we don't hear about it.
a_wild_dandan · 4h ago
What does that matter? We're talking trifectas here, not supermajorities. The filibuster is a cute remnant of "decorum." It's a vestigial rule which will disappear when too inconvenient. (Fun question with not-so-fun answers: why isn't the filibuster gone already?)
ethbr1 · 2h ago
> (Fun question with not-so-fun answers: why isn't the filibuster gone already?)
Because both parties are scared eventually the other party will be back in the majority.
9283409232 · 4h ago
The answer is to vote out politicians. Getting ranked choice voting on your states ballot would go a long way to fixing this. They would not have Mamdani on the ballot for NY mayor if it wasn't for ranked choice voting. Certain politicans know this and have made RCV illegal in their state. Get RCV on the ballot for your state.
boroboro4 · 2h ago
Not important but Mamdani would’ve won without ranked choice voting too, it didn’t play a role in the end.
tialaramex · 1h ago
We can't know. Ranked choice changes how people vote.
In particular it gives people permission to vote for a candidate they like but don't expect to be able to win.
mindslight · 4h ago
RCV / Ranked Pairs of course. The IRV decision process is still a relic of the two party system, with the possibility for some pretty terrible strategic-voting dynamics as votes diverge from just two major parties.
sugarpimpdorsey · 4h ago
The last time something like that happened was probably the Patriot Act.
Calavar · 4h ago
The 2024 Ukraine defense funding bill passed despite having < 50% support in the majority party in the House, and it was not part of a reconciliation.
rpiguy · 4h ago
Affordable Care Act (Obamacare) was the most sweeping legislation ever passed via reconciliation.
apsec112 · 3h ago
Obamacare was passed via regular order (60 Senate votes), not reconciliation. There was a follow-up package to tweak it that passed via reconciliation in 2010, but the original bill was regular order. It's the only (very brief) window where one party has held 60 Senate seats since 1977.
pfannkuchen · 3h ago
It seems like a more formalized quid pro quo system is needed so that political favors can be split across bills and relied upon. This sort of thing seems to be human nature, it doesn’t help anyone to pretend in the procedural rules that it doesn’t happen.
disgruntledphd2 · 21m ago
This was called pork when it used to happen and people were very angry about it.
onlyrealcuzzo · 3h ago
Which is why we need to get rid of reconciliation and go back to actually needing to get compromise, but hell will freeze over twice before that happens.
earth2mars · 5h ago
This. TCJA removed it and OBBBA restored it. What am I missing here
rhinoceraptor · 5h ago
Classic 45-47 maneuver, first create a problem. Then solve it, often poorly and incompletely. Finally, claim victory, another 300 IQ 5D chess move in the books.
lesuorac · 5h ago
It lets you claim BBB doesn't increase the budget by as much as it'll ultimately do.
By having a bunch of random provision in BBB that generate revenue it lowers it's impact on the defect and then you can repeal them later on after passing BBB.
mindslight · 4h ago
Twisting not required. Depreciation straightforwardly applies to every other business capital expenditure. Hire someone to put a new roof on a rental property, and you're out the tens of thousands of dollars cash while only getting an immediate deduction for one thirtieth of the value. If you were expecting to pay that cash out of income, it's effectively a realized income and then reinvestment.
The recent (-ly undone) change went against decades of how things were, was crippling for medium size cashflow-positive startups, effectively increased taxes, etc. But it was really just a straightforward application of the general principles that apply to most everything else.
djoldman · 4h ago
?
This applied to salaries, it wasn't a capital expenditure as "capital expenditure" has traditionally been defined.
This was an operational expense.
tomrod · 3h ago
While accurate, capex captures the building of things, like hiring a company (that pays salaries) to build a factory.
mindslight · 4h ago
Yes, salaries spent to build a capital asset. Half the cost of a new roof is paying salaries, right? And yet, you still depreciate the whole value of the completed thing, not just the cost of the input materials. If you hire the roofers yourself as employees, you're still supposed to be accounting this way - although obviously there are many ways to fudge it.
The point is that building a piece of software that is going to be in use for several+ years is creating an asset. It just goes against our intuition since this industry is so driven by fast fashion, and the bookkeeping of specific components, their depreciation schedules, early end of life, (etc) seems like needless complexity.
creato · 2h ago
At least 50% of time on every software team I've ever been on was spent on maintenance and fixing bugs.
You can expense such time as opex, but it has to be justified, and that's often difficult to do. Did you fix a bug by refactoring some code to avoid the problem? Is that capex or opex? Can you convince the IRS of such?
The old (and now new) rules eliminated this accounting game and uncertainty.
mindslight · 2h ago
Sure. I get that having to facilitate accounting takes away from programming, and that nothing is cut in dry with the IRS. I'm not even a fan of the general idea of mandatory depreciation schedules, seeing depreciation as more of an artifact that fell out from double entry book keeping's proliferation of different types of accounts. My only point was that this is just the same regime that everything else has to deal with.
For example if you pay someone to fix a leaky roof and they replace a section of a given size, can you call it a repair/maintenance expense or should you be depreciating it as an improvement to the building? Can you convince the IRS of such? The only reason this has more straightforward answers is that accountants have been answering this question longer.
eastbound · 24m ago
The debate is the duration of the capex in software. The law will oscillate between “Software lasts 15 years!” and “basically throw-away”.
At this moment, the law came back to 1-year deprecation.
johncole · 5h ago
I think we will see this lead to a boost in software developer employment.
lsllc · 4h ago
Might even ameliorate some of the corporate RTO efforts and now s/w devs will have more employment choice and a presumably more vibrant job market.
mlinhares · 3h ago
I doubt it, the narrative is that software engineering is dead and everything will be replaced by AI, so that salaries can continue to be depressed. Just like the original passing didn't really cause much trouble in the general market this repeal will mostly just produce more shareholder value.
BobbyJo · 1h ago
Original passing didn't cause much trouble because the provision didn't take effect til 4 years later.
seattle_spring · 2h ago
Anyone who knows anything about software and has used AI for more than 24 hours knows that AI won't be "replacing" software engineering anytime soon.
akmarinov · 49m ago
Hard disagree, I’ve been agentic coding the past couple of months and have written maybe 100 lines doing this for a living.
The rest is coming up with SDDs and reviewing AI’s code.
I can easily see most devs, doctors and lawyers automated away in the next couple of years.
throwawaysleep · 40m ago
Very much agree.
I am overemployed with 3 dev jobs at once. AI is writing virtually all my code and letting me nap all day. Eventually that will end once people see the power of them.
ldjkfkdsjnv · 2h ago
ive been coding 5+ hours a day almost every day for 15 years. i think ai will replace 70% of SWE in the near future. not employement, but 70% of the current work done by engineers
hightrix · 1h ago
Agreed. I see AI as a major tool upgrade in the same way the IDE was an upgrade from text editors. It will quickly replace the need to do trivial things and greatly reduce the time needed to do complex things.
zeroonetwothree · 45m ago
I don’t even spend 70% of my time coding. I suspect that’s common and looking at data it’s more like 25% on average. So even if it replaces 100% of coding (unlikely) that’s the extent of the gain.
x3n0ph3n3 · 3h ago
It's always been a nonsense narrative with lack of grounding in reality.
kelnos · 3h ago
At best it will undo some of the decline over the past 2-3 years.
This "solution" is to a problem the GOP created themselves during Trump's first term, when they made the R&D deduction stuff expire in 2022.
noodletheworld · 3h ago
Are you being serious or sarcastic? I cant tell.
Seriously, that seems unlikely.
Changes like this may have an impact on employment but it’s impossible to observe the results in a vacuum.
Given that most large companies are towing the “AI means less jobs required” line, it seems likely that this will, at best, modestly slow the rate at which companies divest themselves of software developers.
I cant see any reasonable reason, in a broader context, this would have a meaningful impact.
(Yeah yeah, AI means more jobs one day maybe, but right now that is categorically not true, and the future is always pure speculation, but in the near term, the impact of this seems like it probably wont be material to me; maybe a small reduction in the number of layoffs)
Spartan-S63 · 4h ago
I’m hoping so, too, along with another boost in salary growth since they’re immediately expensable.
tareqak · 6h ago
> Foreign R&D must still be amortized over 15 years
me551ah · 1h ago
Sure, foreign R&D still gets amortized over 15 years (NPV ≈59 % of a full write-off, so you “lose” ~8.6 % of your R&D spend in present-value terms, and only 6.7 % of the cost is deductible in year 1, creating a 19.6 % cash-tax gap).
But offshore wages are often 50–70 % below U.S. rates:
• Even after the slower amortization drag, hiring at half the cost nets you ~30 % total savings on R&D headcount.
• On a pure cash basis you only need ~20 % lower wages to break even; most offshore markets easily exceed that.
• So the labor-cost arbitrage far outweighs the tax timing penalty unless your foreign salaries are less than ~20 % below U.S. levels.
In short: the 15-year amort rule hurts your tax deduction, but 50 %+ lower offshore wages more than make up for it.
macinjosh · 6h ago
Awesome, this literally could not be better for American tech workers.
beebmam · 6h ago
There's also H-1B (and other worker visa) restrictions/costs imposed. Overall, quite good for the American tech worker
lukeschlather · 4h ago
IDK, sounds like it's a bunch of stupid misc. fees. So instead of just raising the minimum wage for H1Bs and indexing it to inflation, they raise taxes (and these taxes on H1Bs don't seem like a consequential funding source. They might even bring in less tax revenue than raising the H1B minimum wage to where it should be if it had originally been indexed to inflation.)
autobodie · 41m ago
>raising the minimum wage for H1Bs and indexing it to inflation
Huh? Not even regular minimum wage is indexed to inflation. What are you talking about?
seany · 2h ago
Huh? Eliminating h1bs tracks better with what's going on.
Edit: Oh you mean costs in general, not in the context of section 147
lesuorac · 5h ago
Meh.
If you hire H-1B you should be required to pay a fee greater than it costs to educate an equivalent American. Otherwise you're always in the situation where you have to hire foreigners because no Americans are trained. (or in reality you hire foreigners because they're cheaper for the same role which this no longer makes it the case)
calvinmorrison · 4h ago
NJ, home of the H1B scam. I worked with these guys at some large corporations on contract and as an employeed (F500 companies). I felt bad for them. Modern serfs. They lived in housing owned by you know the names of these indian firms that do 'anything'. Companies love the low cost, unlimited hours, and no need to hire, they're contractors. they sign deals with big indian vendors to provide everythingunderthesun.
Poor dudes are like ' this is my chance to make it in America' and the high caste indian management treats them like dirt.
The 'old boomers yelling at young people' is a myth in professional America compared to the absolute screaming insults you'd hear hurled at these guys.
And if they messed up? boom, gone, next guy flown in.
Also (in above source), no ACA subsidies for H-1B visa holders (and others), which likely means employers they will have to pay more for health care if they want to cover their immigrant workers
> $1,000 asylum application fee — first in U.S. history
> $1,000 fee for individuals paroled into the U.S.
> $3,500 fee for sponsors of unaccompanied children
> $5,000 fee for sponsors of unaccompanied children who fail to appear in court
> $550 fee for work permits
> $500 application fee for Temporary Protected Status (TPS)
> $400 fee to file a diversity immigrant visa application
> $250 fee to register for the Diversity Visa Lottery
> $250 visa integrity fee
> $100 year fee while asylum applications remain pending
> $100 fee for continuances granted in immigration court
> $5,000 fee for individuals ordered removed in absentia
> $1,500 fee to adjust status to lawful permanent resident (green card)
> $1,050 fee for inadmissibility waivers
> $900 fee to appeal a decision by an immigration judge
> $900 fee to appeal a decision by DHS
> $1,325 fee to appeal in practitioner disciplinary cases
> $900 fee to file motions to reopen or reconsider
> $600 application fee for suspension of deportation
> $600 application fee for cancellation of removal (permanent residents)
> $1,500 application fee for cancellation of removal (non-permanent residents)
> $30 fee for Form I-94 (arrival/departure record), up from $6
apical_dendrite · 4h ago
The $100/year fee while an asylum case is pending means that the government is charging someone for the government's own inability to process cases quickly.
Brybry · 4h ago
The House's[1] SEC. 112104. EXCISE TAX ON REMITTANCE TRANSFERS. 3.5% tax became 1% in the Senate's[2] SEC. 70604. EXCISE TAX ON CERTAIN REMITTANCE TRANSFERS and a lot of the language changed.
The Senate made a lot of changes (Byrd rule also nuked a lot of stuff) so old articles are of limited use to the final bill.
I don't even know if [2] is the actual final text as there is neither an enrolled or public law version on congress.gov yet.
It's super annoying how often we can't read the final text of a bill before Congress votes on it.
> 3.5% remittance fees on sending money out of the US:
The version of the bill that passed a 1% excise is applicable "only to any remittance transfer for which the sender provides cash, a money order, a cashier’s check, or any other similar physical instrument".
earth2mars · 4h ago
Yes, but why the domestic r&d must be amortized only within 5 years? One way it is harder for finance to deduct all the expense within 1 year or they have to amortize only within 5 years. In case of foreign r&d expenses though they cannot detect in the year they incur but they have 15 years amortize. So I don't get the benefit of. In fact if they haven't touched this it could have been much better. In tcja they made it worse. And they fix it partially by making it deductible within the year they incur for domestic r&d. But the amortization still kills it.
mischanix · 3h ago
And I cannot leave this country any faster.
loeg · 3h ago
You might look at the rest of the bill.
Den_VR · 6h ago
So payroll for R&D is now entirely tax deductible? Businesses get to choose to pay taxes or do R&D for themselves?
alphazard · 5h ago
Tax deductible is a weird way of phrasing it. It's not like these software companies were counting their money at the end of the quarter, and then deciding to do R&D instead of paying taxes. They had already paid R&D expenses to build the product, which gained them revenue. Previously they weren't allowed to actualize the cost of R&D all at once, so the business could be losing money, and still have to pay taxes on top of the loss (which is nuts).
This fixes the problem, so now if you spend $100 on software developers, and you make $100 from the software, then you have $0 income, instead of $80 income.
tomrod · 5h ago
It was also weird because people pay money on income (dividend, partner payment, SCorp share, etc.) anyway, so in a long term view this incentivized companies to keep fewer software engineers on staff.
n_u · 5h ago
It’s more about whether or not the company has taxable profits for that year (importantly these are not the same as real profits). I would read this article to understand more about how being forced to amortize tax deductions for expenses affects a business’s taxes.
Either scenario taxes are paid - it’s just how and over what time period.
tomrod · 5h ago
In the long run, we are all dead. 20% depreciation per year for any software developed is a burden for all but the largest of companies.
bobmcnamara · 4h ago
This matched capex software.
Weird how the depreciation schedule changes based on how the software was acquired.
0xbadcafebee · 2h ago
The elimination of green energy incentives is going to have a big negative effect on the economy. Those billions of dollars not only were going to new businesses and jobs, but they were joined with loans from banks and commitments from customers with the expectation that the government would be funding the remainder. This means private industry and banks will be shouldering the loss of hundreds of billions of dollars, which, as any astute person should know by now, later gets shouldered by the average citizen in rate hikes, stock market plunges, increased inflation, etc. There goes your job and 401k and here comes more expensive products.
Aside from the direct negative effects: we lose even more to foreign countries who now have even more runway to gain expertise in green energy and sell to everyone else investing in it. Nobody but the 3rd world is increasing investments in coal/oil and there's no money we could make there anyway. So there goes any money we could've made on energy internationally.
Either this country is intentionally being tanked, or we're in the stupidest timeline.
jimmydorry · 1h ago
The largest competitor to US renewables, would be China. They have been rolling back their subsidies for years. [1]
China, India, Russia, Turkey, Japan, South Korea, and Indonesia (off the top of my head, and a quick google to add a few I missed [2]) have all increased investments into coal since 2020.
The renewable industry in the US was wrought with companies seizing as many renewable credits and subsidies as they can, while providing as little as possible to show for them. If this moves the industry as a whole to focus on projects that are not just marginal at best, we should start to see better traction on projects that actually matter.
We have long been told that renewables are cheaper in every way that matters, so let's see the economics of that play out.
China has been rolling back subsidies because they won solar panels. No other country is even remotely close to market strength as China here and obviously for Chinese it makes sense to reduce incentives but does that make sense for the US which has 1% of this market power?
> Between January and May, China added 198 GW of solar and 46 GW of wind, enough to generate as much electricity as Indonesia or Turkey [1]
Any green energy project that isn't nuclear is a waste of money and resources. Nuclear is now being pursued in earnest by the tech industry itself. There's no problem here.
cheema33 · 22m ago
> Any green energy project that isn't nuclear is a waste of money and resources.
Nuclear's cost/megawatt is significantly higher than most other options. If anybody is reaching for nuclear it is because they are using up all available capacity through other means. Nobody picks nuclear for cost reasons.
nandomrumber · 1h ago
What evidence is there of governments being more successful at picking winners than the market?
Governments should stay out of the winner-picking business, which they do with money from the public purse, and allow individuals and enterprise to use their own money to have a go at picking winners themselves.
If industry and banks find investment in any particular field unpalatable without Government incentive, then those investments were unpalatable to start with.
Industry and banks will find something better to do with their money.
ChromaticPanic · 1h ago
This isn't a game so it's not about picking winners. It's about steering the economy so local businesses get an advantage over foreign entities.
nandomrumber · 46m ago
By all means, have government get out of the way so the economy can get on with it.
I'm more in favour of tax incentivised encouragement, lowering the barriers to entry, and more so when there are proven benefits to the economy and society, and less in favour of government backed loans and direct cash injection.
raverbashing · 1h ago
Cool, cut all the oil subsidies, and road subsidies, and let the market decide
nandomrumber · 54m ago
Did you know if you run a business (carry on an enterprise) the majority of the costs of doing business are tax deductible.
That's another term subsidised.
I'd argue fossil fuel industry subsidies are a net benefit to society as they help enable cheap reliable energy.
Whereas renewable subsidies are a net negative because they don't. Everywhere more renewables have gone electricity has become more expensive and less reliable, completely antithetical to strong industrial development.
Also, renewables seem to be driven forward largely due to a psychological contagion that a climate apocalypse is nigh, which is turning out to be completely toxic, especially to the minds of the next generations.
tired-turtle · 34m ago
> Everywhere more renewables have gone electricity has become more expensive and less reliable, completely antithetical to strong industrial development.
Have you heard of Washington state? 75% renewable energy and 10th percentile for the cost per kWh.
jandrewrogers · 18m ago
Washington is a bit of a special case given that most of their electricity comes from vast hydroelectric resources constructed almost a century ago. That situation doesn’t generalize to other places. It is disingenuous to imply that this is an example relevant to modern energy policy.
jaybrendansmith · 1h ago
Sure, I'll bite. Will they invest in more coal and gas instead? And help cook the planet? You post as if you don't know what it's about, but of course you do. Disingenuous and contemptible.
archagon · 11m ago
Oh, goody!
Also, ICE has a bigger budget now than most of the world's militaries[1]. But let's not talk about that.
The 2nd most annoying thing about section 174 was all the time you had to spend classifying each engineer's time spent as R&D or 'internal software'. At my last company, every year, me and my engineering lead counterparts would spent almost a day reviewing each engineer's JIRA tickets to reconstruct how much of their time was spent on R&D vs internal software.
supriyo-biswas · 4h ago
At a previous employer, they used to have this process where they would classify each project as being in active development or being in maintenance, and even the tiniest bit of development work required the "initiation" of a "project" with budget planning and approvals.
At the time I dismissed it as a bureaucratic process invented by the company; after all, they had no dearth of leaders adding bureaucracy to systems for the purpose of empire-building and, to a lesser extent, asserting self-importance. However, upon reading about Section 174, it made some sense, and I wonder whether they might just get around to removing these processes.
viraptor · 3h ago
> and even the tiniest of development work required the "initiation" of a "project" with budget planning and approvals.
That's fully automateable though, right? Sounds like my script to upload a PR, create a JIRA ticket with the same name, link them up, auto-Done on merge.
supriyo-biswas · 31m ago
At the company I was speaking of, the business approval step involved internal (and sometimes external meetings) and preparation of a feature and OKR document.
While this was the obvious way of doing things there, without this project step I also don’t think it’d have been regarded as a valid classification step for tax purposes.
samrus · 2h ago
You cant automate the tactical assessment of "do we want to incur this tax?" Not easily anyway
xvector · 28m ago
Thank jeebus.
nashashmi · 2h ago
This was the expense that was removed in the first Trump tax bill. Amazing how it takes another super tax bill just to get it through
root_axis · 1h ago
I believe the impact of Section 174 has been vastly overstated, sadly we will soon observe this to be the case.
cheema33 · 24m ago
Nobody at my work knew anything about it. And we do have software engineers. I suspect only the very large orgs with expensive accountants were complying. And pay now vs later thing didn't really matter that much to them anyway.
BobbyJo · 55m ago
What do you base that belief on?
autobodie · 39m ago
I would assume they think the cause of the layoffs was more related to the non-zero interest rate.
doctorpangloss · 57m ago
Well who the hell was complying anyway?
rufus_foreman · 6h ago
Actual title is "House Passes Tax Bill Sending to President for Signature – Details Inside".
tareqak · 4h ago
I came across the article on Techmeme, and they used the following title: “President Trump signs the One Big Beautiful Bill, which allows immediate deduction of US software labor; foreign R&D still must be amortized over 15 years”.
9283409232 · 4h ago
I think editorializing the title is fine in this case. The original headline is not descriptive and buries the part that would be relevant to HN.
Sure, foreign R&D still gets amortized over 15 years (NPV ≈59 % of a full write-off, so you “lose” ~8.6 % of your R&D spend in present-value terms, and only 6.7 % of the cost is deductible in year 1, creating a 19.6 % cash-tax gap). But offshore wages are often 50–70 % below U.S. rates:
• Even after the slower amortization drag, hiring at half the cost nets you ~30 % total savings on R&D headcount.
• On a pure cash basis you only need ~20 % lower wages to break even; most offshore markets easily exceed that.
• So the labor-cost arbitrage far outweighs the tax timing penalty unless your foreign salaries are less than ~20 % below U.S. levels.
In short: the 15-year amort rule hurts your tax deduction, but 50 %+ lower offshore wages more than make up for it.
On paper, offshoring has made sense the entire time, and yet here we are in 2025 and companies still hire American devs. Not only that, they often fly in foreign devs just to pay them more here than if they had just offshored to their home country.
“For purposes of this section, any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure“
Page 303 of bill here https://www.congress.gov/119/bills/hr1/BILLS-119hr1eas.pdf
Original article about Section 174 tax code causing layoffs
https://news.ycombinator.com/item?id=44180533
Post from @dang with more info about Section 174
https://news.ycombinator.com/item?id=44226145
> there shall allowed as a deduction any domestic research and experimental expenditures which are paid or incurred by the taxpayer in the current taxable year
AFAIK, there was no domestic vs. foreign R&D distinction in section 174 before.
If so, it sounds almost too good to be true. Why aren't all startups in Canada?
We adopt new products less. We are far more risk averse about purchasing goods or services from startups, far more risk averse about funding them (founders often give personal guarantees to get the investment), value the equity startups offer at far less, etc. Government is far more fussy about accountability with that refundable R&D money, so lots of time is spent filling out paperwork and hiring consultants to do it.
Here is a video that explains a lot about Canadian purchasing:
https://www.cbc.ca/player/play/video/1.4596459
This is going to make a lot of people's lives a lot worse and I'm against it even though it's an absurd windfall for me and people like me.
Everyone's BATNA just skyrocketed. What you choose to do with a huge surge in your pricing power is up to you, but you have it.
There is no reason to have cognitive dissonance over it.
two counteracting forces:
The senate parliamentarian decided they could be in the reconciliation bill
and outside of the reconciliation bill, believe it or not, Congress does pass other bills over the 60 senate vote threshold
This R&D one would be a decent candidate
> Companies with capitalized domestic R&D expenses from 2022–2024 can elect a catch-up deduction, which could significantly improve cash flow for firms engaged in innovation.
But when a forest is cut, usually a new forest that grows on that place looks different.
No, and lots of controversial bills have passed other than as reconciliation bills, and especially so during trifectas where they "controversial" within the minority party but broadly supported by the majority; reconciliation is necessary to pass something that strains unity in the majority party and is uniformly opposed by (not "controversial to") the minority party, perhaps.
I wouldn't like what the current congress would do without the filibuster, but at this point a paralyzed system might be worse.
All of these except the first two were bipartisan and got 60 Senate votes (or more)
It does seem like things are trending toward less public laws passing over the last decade, as well as record low time in session and other congressional activity.
https://www.congress.gov/bill/118th-congress/senate-bill/870...
A lot of what happens in Congress is obvious to do and everyone agrees. While the media certainly focuses on the handful of things the two parties are at odds over, most of the lawmaking done by Congress is not controversial between parties, and is simply passed, so we don't hear about it.
Because both parties are scared eventually the other party will be back in the majority.
In particular it gives people permission to vote for a candidate they like but don't expect to be able to win.
By having a bunch of random provision in BBB that generate revenue it lowers it's impact on the defect and then you can repeal them later on after passing BBB.
The recent (-ly undone) change went against decades of how things were, was crippling for medium size cashflow-positive startups, effectively increased taxes, etc. But it was really just a straightforward application of the general principles that apply to most everything else.
This applied to salaries, it wasn't a capital expenditure as "capital expenditure" has traditionally been defined.
This was an operational expense.
The point is that building a piece of software that is going to be in use for several+ years is creating an asset. It just goes against our intuition since this industry is so driven by fast fashion, and the bookkeeping of specific components, their depreciation schedules, early end of life, (etc) seems like needless complexity.
You can expense such time as opex, but it has to be justified, and that's often difficult to do. Did you fix a bug by refactoring some code to avoid the problem? Is that capex or opex? Can you convince the IRS of such?
The old (and now new) rules eliminated this accounting game and uncertainty.
For example if you pay someone to fix a leaky roof and they replace a section of a given size, can you call it a repair/maintenance expense or should you be depreciating it as an improvement to the building? Can you convince the IRS of such? The only reason this has more straightforward answers is that accountants have been answering this question longer.
At this moment, the law came back to 1-year deprecation.
The rest is coming up with SDDs and reviewing AI’s code.
I can easily see most devs, doctors and lawyers automated away in the next couple of years.
I am overemployed with 3 dev jobs at once. AI is writing virtually all my code and letting me nap all day. Eventually that will end once people see the power of them.
This "solution" is to a problem the GOP created themselves during Trump's first term, when they made the R&D deduction stuff expire in 2022.
Seriously, that seems unlikely.
Changes like this may have an impact on employment but it’s impossible to observe the results in a vacuum.
Given that most large companies are towing the “AI means less jobs required” line, it seems likely that this will, at best, modestly slow the rate at which companies divest themselves of software developers.
I cant see any reasonable reason, in a broader context, this would have a meaningful impact.
(Yeah yeah, AI means more jobs one day maybe, but right now that is categorically not true, and the future is always pure speculation, but in the near term, the impact of this seems like it probably wont be material to me; maybe a small reduction in the number of layoffs)
But offshore wages are often 50–70 % below U.S. rates:
• Even after the slower amortization drag, hiring at half the cost nets you ~30 % total savings on R&D headcount.
• On a pure cash basis you only need ~20 % lower wages to break even; most offshore markets easily exceed that.
• So the labor-cost arbitrage far outweighs the tax timing penalty unless your foreign salaries are less than ~20 % below U.S. levels.
In short: the 15-year amort rule hurts your tax deduction, but 50 %+ lower offshore wages more than make up for it.
Huh? Not even regular minimum wage is indexed to inflation. What are you talking about?
Edit: Oh you mean costs in general, not in the context of section 147
If you hire H-1B you should be required to pay a fee greater than it costs to educate an equivalent American. Otherwise you're always in the situation where you have to hire foreigners because no Americans are trained. (or in reality you hire foreigners because they're cheaper for the same role which this no longer makes it the case)
Poor dudes are like ' this is my chance to make it in America' and the high caste indian management treats them like dirt.
The 'old boomers yelling at young people' is a myth in professional America compared to the absolute screaming insults you'd hear hurled at these guys.
And if they messed up? boom, gone, next guy flown in.
3.5% remittance fees on sending money out of the US: https://www.globalimmigrationblog.com/2025/06/what-are-the-i...
Also (in above source), no ACA subsidies for H-1B visa holders (and others), which likely means employers they will have to pay more for health care if they want to cover their immigrant workers
> Expansion of Immigration Fees:
> $1,000 asylum application fee — first in U.S. history
> $1,000 fee for individuals paroled into the U.S.
> $3,500 fee for sponsors of unaccompanied children
> $5,000 fee for sponsors of unaccompanied children who fail to appear in court
> $550 fee for work permits
> $500 application fee for Temporary Protected Status (TPS)
> $400 fee to file a diversity immigrant visa application
> $250 fee to register for the Diversity Visa Lottery
> $250 visa integrity fee
> $100 year fee while asylum applications remain pending
> $100 fee for continuances granted in immigration court
> $5,000 fee for individuals ordered removed in absentia
> $1,500 fee to adjust status to lawful permanent resident (green card)
> $1,050 fee for inadmissibility waivers
> $900 fee to appeal a decision by an immigration judge
> $900 fee to appeal a decision by DHS
> $1,325 fee to appeal in practitioner disciplinary cases
> $900 fee to file motions to reopen or reconsider
> $600 application fee for suspension of deportation
> $600 application fee for cancellation of removal (permanent residents)
> $1,500 application fee for cancellation of removal (non-permanent residents)
> $30 fee for Form I-94 (arrival/departure record), up from $6
The Senate made a lot of changes (Byrd rule also nuked a lot of stuff) so old articles are of limited use to the final bill.
I don't even know if [2] is the actual final text as there is neither an enrolled or public law version on congress.gov yet.
It's super annoying how often we can't read the final text of a bill before Congress votes on it.
[1] https://www.congress.gov/bill/119th-congress/house-bill/1/te...
[2] https://www.congress.gov/bill/119th-congress/house-bill/1/te...
The version of the bill that passed a 1% excise is applicable "only to any remittance transfer for which the sender provides cash, a money order, a cashier’s check, or any other similar physical instrument".
This fixes the problem, so now if you spend $100 on software developers, and you make $100 from the software, then you have $0 income, instead of $80 income.
https://news.ycombinator.com/item?id=44180533
more info here too
https://news.ycombinator.com/item?id=44226145
Weird how the depreciation schedule changes based on how the software was acquired.
Aside from the direct negative effects: we lose even more to foreign countries who now have even more runway to gain expertise in green energy and sell to everyone else investing in it. Nobody but the 3rd world is increasing investments in coal/oil and there's no money we could make there anyway. So there goes any money we could've made on energy internationally.
Either this country is intentionally being tanked, or we're in the stupidest timeline.
China, India, Russia, Turkey, Japan, South Korea, and Indonesia (off the top of my head, and a quick google to add a few I missed [2]) have all increased investments into coal since 2020.
The renewable industry in the US was wrought with companies seizing as many renewable credits and subsidies as they can, while providing as little as possible to show for them. If this moves the industry as a whole to focus on projects that are not just marginal at best, we should start to see better traction on projects that actually matter.
We have long been told that renewables are cheaper in every way that matters, so let's see the economics of that play out.
[1] https://www.reuters.com/business/energy/china-roll-back-clea...
[2] https://ember-energy.org/latest-updates/wind-and-solar-repla...
> Between January and May, China added 198 GW of solar and 46 GW of wind, enough to generate as much electricity as Indonesia or Turkey [1]
1 - https://www.theguardian.com/world/2025/jun/26/china-breaks-m...
Nuclear's cost/megawatt is significantly higher than most other options. If anybody is reaching for nuclear it is because they are using up all available capacity through other means. Nobody picks nuclear for cost reasons.
Governments should stay out of the winner-picking business, which they do with money from the public purse, and allow individuals and enterprise to use their own money to have a go at picking winners themselves.
If industry and banks find investment in any particular field unpalatable without Government incentive, then those investments were unpalatable to start with.
Industry and banks will find something better to do with their money.
I'm more in favour of tax incentivised encouragement, lowering the barriers to entry, and more so when there are proven benefits to the economy and society, and less in favour of government backed loans and direct cash injection.
That's another term subsidised.
I'd argue fossil fuel industry subsidies are a net benefit to society as they help enable cheap reliable energy.
Whereas renewable subsidies are a net negative because they don't. Everywhere more renewables have gone electricity has become more expensive and less reliable, completely antithetical to strong industrial development.
Also, renewables seem to be driven forward largely due to a psychological contagion that a climate apocalypse is nigh, which is turning out to be completely toxic, especially to the minds of the next generations.
Have you heard of Washington state? 75% renewable energy and 10th percentile for the cost per kWh.
Also, ICE has a bigger budget now than most of the world's militaries[1]. But let's not talk about that.
[1]: https://www.newsweek.com/immigration-ice-bill-trump-2093456
At the time I dismissed it as a bureaucratic process invented by the company; after all, they had no dearth of leaders adding bureaucracy to systems for the purpose of empire-building and, to a lesser extent, asserting self-importance. However, upon reading about Section 174, it made some sense, and I wonder whether they might just get around to removing these processes.
That's fully automateable though, right? Sounds like my script to upload a PR, create a JIRA ticket with the same name, link them up, auto-Done on merge.
While this was the obvious way of doing things there, without this project step I also don’t think it’d have been regarded as a valid classification step for tax purposes.