from Hacker News

Section 174 is reversed, mostly

by jawns on 7/18/25, 6:07 PM with 99 comments

• by avbanks on 7/18/25, 6:33 PM

  The effects of Section 174 seem to be understated, it aligns with the layoffs and the size of the layoffs.

• by breakyerself on 7/18/25, 6:37 PM

  Someone must have made a mistake. This government just broke its perfect record of only fucking things up.

• by walterbell on 7/18/25, 7:58 PM

  "Tell HN: Help restore the tax deduction for software dev in the US (Section 174)", 900+ comments, https://news.ycombinator.com/item?id=44226145

  "OBBB signed: Reinstates immediate expensing for U.S.-based R&D", 300+ comments, https://news.ycombinator.com/item?id=44469124

• by vineyardmike on 7/18/25, 6:52 PM

  One thing that I haven’t seen widely reported on, but this article highlights is that the reversal is only for US based employees, so outsourcing jobs overseas will be more expensive compared to American talent (if salaries are equal). This seems good for the US tech industry, and I’m curious how this form protectionism compares to jobs in other sectors.

  It’ll also be interesting to watch to see if this has any side-effects on the job market. In my experience in big-tech, a lot of the overseas jobs were historically supporting roles and “keep the lights on” for legacy services. I can imagine these tasks aren’t valuable enough to pay Silicon Valley salaries, and that’s why lower cost talent was used. It’ll be interesting to see if these roles move to low-COL or remote American workers. I can totally imagine that a European or even Indian salary for a senior engineer in big tech would be livable in some parts of the US.

• by mertleee on 7/18/25, 7:40 PM

  Watch them increase the H1b cap after this "win"...

• by froggertoaster on 7/18/25, 8:32 PM

  > The remaining thing that stings for companies is how foreign devs still need to be amortized for 15 years.

  I'm having a hard time seeing the issue with this.

• by throwawaybbq1 on 7/18/25, 6:41 PM

  Does this mean a huge hiring uptick in the US/layoff reversal? I do think this law caused some of the bad market. Will undoing it get us back to where we were?

• by qkeast on 7/18/25, 7:24 PM

  Does the 15-year period for non-US developers only apply to developers? What about roles like designers, product managers, and so on?

• by iooi on 7/18/25, 10:40 PM

  > The regulation especially hurt small businesses, bootstrapped companies, and those making a small loss or profit.

  How does this affect FAANGs?

• by g42gregory on 7/20/25, 9:02 AM

  > "In short, salaries paid to software engineers can no longer be deducted as a cost, like all other employee wages are."

  I simply can not accept this as the full story. Here is why:

  Google is full of software engineers. If the effect on the bottom line was this big, they have the capacity (together with Oracle, Palantir, Meta depending on the administration) to simply change the government.

  They would not have waited for the legislation "to fix it". It would have been changed immediately. Since they haven't done that, I am questioning whether this is the full story. Happy to be proven wrong.

• by robotnikman on 7/19/25, 1:39 AM

  So glad to see some good news for a change! This gives me some more hope that my career path will still be viable in the future.

• by spwa4 on 7/19/25, 10:24 AM

  Why, every single time governments want to raise tax, do they target individual people? The explicit goal was to increase tax collection from tech companies, and what do they do? Charge per employee, forcing everyone from startups (especially) to large tech companies, and everyone in between, from your garage to your phone company to really think about if they really need every software engineer they have.

  This still effectively means the price difference between US and non-US software engineers (and ancillary, like data engineers) is increased by 1.04^15 (the risk-free interest rate on expenses, over 15 years). This works out to about US-based SWEs being about 33.5% cheaper. TLDR: this is not enough to prevent jobs moving to India. Or should I say, it means the US charges US companies per-employee income tax of 33.5% for every NON-US software engineer on top of their pay.

• by kevmo314 on 7/18/25, 7:26 PM

  > Companies have the choice to amortize salaries if they want.

  I am curious, is there ever a time you would want this? Maybe if you’re operating at a loss?

• by mlsu on 7/18/25, 7:57 PM

  I'm really confused as to how Section 174 made it in in the first place. It seems like a carveout specifically to target software engineers, who, despite being a wealthy bloc, still work for their money.

  Why was this done? Simple vengeance in 2022 for how high salaries got and how many silicon valley people were bragging about buying a second house by the slopes? Or was there a deeper policy reason?