But things have changed. Some great news is that part of S174 is struck off , fully for US employees. Buried deep inside Trump’s “Big, Beautiful Bill” is a provision that allows companies to keep deducting expenses related to software development in the same tax year. Basically, developer salaries can be deducted just like before 2023. Companies have the choice to amortize salaries if they want. In the original draft, this was planned to be a temporary relief until 2030. But in the final bill it was removed permanently.
I disagree with the conclusion that this will lead to more US hiring. The end of the ZIRP era means that outsourced labor or micro teams + AI will outperform full build outs that we saw during 2011-2022
Quote Citation: Gergely Orosz, “The Pulse: Section 174 is reversed! Mostly, that is”, 2025-03-11, https://newsletter.pragmaticengineer.com/p/the-pulse-section-174-is-reversed