Section 174 is a tax rule... It used to let companies deduct all of their R&D costs in the same year they spent the money…. That included salaries for enginers, software tools, and product development… back In 2022, the rule changed. Now companies have to spread those deductions out over 5 or even 15 years. That means they get less tax relief up front. It hit hard especially for tech companies that spend a lot on R&D but aren’t always profitable yet.
To deal with higher tax bills many cos cut costs. That led to mega layoffs - more than 500K tech jobs axed since the change took effect. Big firms like Meta, Microsoft, Googl and Dell laid off thousands. Smaller companies struggled even more, its he-l out there…The old rule had supported growth. It encouraged buildin products in the US. and hiring local talent... The new version did the opposite. It made innovation more expensive and less attractive…
Today some lawmakers want to reverse the change. But it is likly be too late. The damage is already done. And the effects go beyond tech / when high-paid workers lose jobs, local businesses feel it too.
This tax change was meant to save money... Instead, it slowed down one of the strongest parts of the US economy. We pay the price for their mistakes.