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

Scope of the Change (Section 174 / R&D Expensing)

• TCJA (effective 2022) forced R&D – including software development – to be capitalized and amortized (5 years domestic, 15 years foreign).
• Commenters describe absurd situations where companies losing cash still owed tax because R&D salaries couldn’t be fully deducted in the current year.
• OBBB restores immediate expensing for domestic R&D and explicitly treats software development as R&D, with a catch‑up deduction allowed for 2022–2024 costs.
• Many see this as undoing a serious policy mistake that hurt startups and cash‑flow‑positive growth companies and generated significant accounting overhead (engineer time classification, “project” bureaucracy).

Domestic vs Foreign R&D and Offshoring Incentives

• Foreign R&D remains on a 15‑year amortization schedule. Some hail this as “literally could not be better” for US tech workers.
• Others do the math: the NPV penalty is modest compared to 50–70% lower offshore wages, so tax timing alone rarely outweighs labor‑cost arbitrage.
• Debate over what counts as “foreign” (employees of a foreign subsidiary vs direct foreign contractors) remains somewhat unclear in the discussion.
• Several note persistent non‑tax frictions with offshoring: time zones, culture, legal complexity, chronic quality/coordination issues and repeated cycles of offshoring then onshoring.

Immigration, H‑1B, and Fees

• Thread highlights a raft of new or higher immigration‑related fees and a small excise tax on certain cash remittances abroad.
• Some argue this effectively raises the cost of foreign workers, indirectly favoring domestic hiring; others see it as nickel‑and‑diming immigrants rather than fixing core issues (like H‑1B wage floors).

Impact on Hiring, Layoffs, and AI Narrative

• Many expect improved startup cash flow and some increase in US developer hiring or at least fewer layoffs, especially at smaller firms that truly felt 174.
• Others think the layoffs were mainly about higher interest rates, stock‑price management, and AI “vibes,” so the reversal of 174 will only partially offset broader headcount pressure.
• Strong disagreement on AI: some see it replacing a large share of coding work (especially junior/mid roles), others say it’s a powerful accelerator but far from replacing software engineering as a job.

Legislative Process and Omnibus Politics

• The bill is widely criticized as “overstuffed”: R&D fix plus unrelated items (immigration fees, green‑energy changes, gambling loss limits, Medicaid timing).
• Several see this as a symptom of a broken US process: one big reconciliation bill, delayed “time‑bomb” provisions, and partisan games about when cuts take effect.
• Extended subthreads debate filibuster, reconciliation, and alternative voting systems (RCV, approval, STAR) as structural reforms.

Green Energy, Deficits, and Distributional Concerns

• Removal or reduction of green‑energy incentives is seen by some as a major negative shock: stranded private investments, lost industrial policy vs China/Europe, and long‑run climate/competitiveness costs.
• Others argue non‑nuclear renewables have been subsidy‑dependent and should now prove their economics.
• Several frame OBBB as a large wealth transfer via higher deficits and inflation: benefits accruing to capital owners and high‑margin firms, with ordinary savers paying via devalued dollars.

International Comparisons

• Canada’s SR&ED and similar European credits (e.g., France’s CIR) are mentioned as more generous on paper (large refundable percentages of dev salaries), but also paperwork‑heavy, patchily enforced, and sometimes abused.
• Some non‑US commenters note that in their systems, 100% expensing of software salaries is normal, making the US experiment with Section 174 look especially self‑sabotaging.