OBBB signed: Reinstates immediate expensing for U.S.-based R&D • Hacker News Board

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#141

Post by BobbyJo » Sat, Jul 05, 2025, 6:25 AM UTC

me551ah wrote: post #134

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 50–7…

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.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#142

Post by tired-turtle » Sat, Jul 05, 2025, 6:26 AM UTC

nandomrumber wrote: post #125

raverbashing wrote: post #114

Earlier quoted context omitted.

Cool, cut all the oil subsidies, and road subsidies, and let the market decide

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…

> 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.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#143

Post by eric-burel » Sat, Jul 05, 2025, 6:28 AM UTC

Galanwe wrote: post #133

ttul wrote: post #84

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…

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.

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 expenses.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#144

Post by supriyo-biswas » Sat, Jul 05, 2025, 6:29 AM UTC

viraptor wrote: post #63

supriyo-biswas wrote: post #30

Earlier quoted context omitted.

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…

> 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.

At the company I was speaking of, the business approval step involved many 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.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#145

Post by __loam » Sat, Jul 05, 2025, 6:31 AM UTC

BobbyJo wrote: post #141

me551ah wrote: post #134

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 50–7…

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.

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.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#146

Post by xvector » Sat, Jul 05, 2025, 6:32 AM UTC

Thank jeebus.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#147

Post by cheema33 » Sat, Jul 05, 2025, 6:35 AM UTC

root_axis wrote: post #109

I believe the impact of Section 174 has been vastly overstated, sadly we will soon observe this to be the case.

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.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#148

Post by eastbound » Sat, Jul 05, 2025, 6:36 AM UTC

mindslight wrote: post #60

djoldman wrote: post #55

Earlier quoted context omitted.

? This applied to salaries, it wasn't a capital expenditure as "capital expenditure" has traditionally been defined. This was an operational expense.

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 goi…

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.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#149

Post by eric-burel » Sat, Jul 05, 2025, 6:38 AM UTC

me551ah wrote: post #134

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 50–7…

If I read properly this is explicitely targeting UE, Canada, UK and other countries with high wages and R&D and software engineering capabilities.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#150

Post by cheema33 » Sat, Jul 05, 2025, 6:38 AM UTC

sp527 wrote: post #104

0xbadcafebee wrote: post #91

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…

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.

> 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.