Ask HN: Why did Congress recently add a Software "Special Rule" in the tax code?

3 pointsrhornberger2y ago2 comments

Does anyone know the history of why the new tax code has a "special rule" just for Software now?

I've asked my Representative to help me research it but they still have no idea.

In 2022, Congress added a "special rule" just for software companies, which means our industry uniquely can no longer expense our employees' salaries (including designers, engineers, QA, and more).

You can find the special rule in Section 174 or learn more on my website https://cinder.studio

This is definitely the real cause of all the layoffs.

2 comments

I_Am_Nous2y ago

Seems like the main thing is rectifying what "research and development" entails and how it's taxed. Software development was grouped together with other kinds of development, which I believe would be traditional prototyping, modeling, and building test units (in a physical industry).

rhornbergerOP2y ago

What I want to see is that they remove the "special case" rule for software from the line. Let us decide what is R&D and not R&D. Right now the new rule says "all" software is R&D and that is where our biggest problem lies.

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