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
Today, the House passed the Senate's version of the “One Big Beautiful Bill Act” (OBBBA), marking a significant overhaul to federal tax policy.
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Context & Ripple Effects
The legislation’s path from House consideration to enactment turns a proposed tax-policy package into an operating constraint for companies deciding where to place development work. The same package also paired software-tax treatment with enhanced incentives for domestic chip manufacturing, showing that its industrial-policy effects extend beyond software.
Related coverage also documented expanded Qualified Small Business Stock tax benefits, making this a broader shift in how the law rewards US-based investment, company formation, and production.
First-order effects
Companies can deduct qualifying US software labor immediately, improving the near-term tax treatment of domestic development spending relative to foreign R&D.
Foreign R&D costs remain spread over 15 years, creating a materially different timing outcome for firms that distribute engineering work across countries.
Second-order effects
Finance and engineering leaders have a new tax reason to favor US-based software hiring and to reassess the location of marginal R&D projects; subsequent coverage reported revived US startup hiring plans tied to accelerated R&D deductions.
The disparity can raise the effective near-term cost of offshore R&D, affecting outsourcing and multinational staffing decisions even where technical talent or operating needs still favor overseas teams.
Third-order effects
If maintained, the policy could make tax timing a more durable determinant of where software R&D is performed, alongside the bill’s separate domestic-manufacturing incentives.
The measure points to a more segmented US industrial policy: domestic labor and capital receive targeted tax advantages, while cross-border innovation spending faces less favorable treatment.
The trend: The One Big Beautiful Bill is part of a broader move to use tax policy to steer technology investment, hiring, and production toward the US.
includes retroactive relief from 2022 until now for certain businesses so it's like it never happened financially — it succeeded in its intended goal of cranking the pressure up high on the tech middle class and radicalizing them against Biden — and it's set up to happen agai…
the software R&D tax changes passed in the 1st Trump admin (Section 174) that activated in 2022 & nuked the tech job market are repealed in the recent Giant Stupid Bill — so the tech job market might rebound in the next few months — however they are set to detonate again in 2…
at least they fixed section 174 taxation, I actually think this will quietly have a huge positive impact on tech sector jobs include games, it was basically invisible to ICs but it was a MASSIVE tax burden that showed up in the last couple years, now relieved.
Looks like all the relevant section 174 stuff made it into the bill. We can write off software devs (btw without this, push to eliminate devs for AI would have been even larger) and can recoup our outstanding amortized amounts. Think either refile now or else deduct on 2025 tax…
A reminder that you're allowed to celebrate that Section 174 has (finally!) been fixed in the One Big Beautiful Bill (OBBB) while also criticizing other parts of the bill.
3 - Relief for software companies in America There was a wild piece of legislation that forced you to amortize software developer salaries over 5 years This resulted in software companies that could lose money and still face a tax bill! This is fixed https://x.com/...
@RichardRubinDC If I may suggest an addition to the winners column: small software companies. A majority of our expenses are often engineer salaries, and for the past three years, we've had to amortize them, creating massive tax burdens on phantom income. It crushed a lot busines…
Trump's One Big Beautiful Bill Act (OBBBA) offers an incredible incentive to startup founders and early employees with more lenient QSBS! Qualified small business stock (QSBS) means if you're granted stock in a company with under a certain value X of assets, selling Y dollars of …
This is actually huge for the US tech sector. The past three years have effectively been levying a double digit tax on software salaries, that's over and they're finally back on a level playing field with other payroll expenses
> Full expensing for short-lived assets ✅ > Full expensing for R&D expenses ✅ > Full expensing for structures ❌ > Border Adjustment ❌ DBCFT in 4 [video]
Even better. The final version has completely removed Section 174, not just suspended, while keeping 15 year amortization for foreign expenses. Amazing news for US software dev industry.
The Section 174 tax issue has finally been addressed. It has been a tough three years for taxes in the tech industry. Thank you to everyone that weee vocal on the issue, those of you that have been involved with reaching out to politicians, and Congress for fixing this unfair tax
Section 174 has been fixed by the One Big Beautiful Bill Everyone in tech, please join me in saying: Thank you @realDonaldTrump , thank you, @JDVance ! [image]
Congrats to everyone who lobbied Congress to let businesses expense payroll (again). The past three years were a difficult time for business owners and tech employees, many of whom lost jobs because of Section 174.