The tax change that blindsided tech firms may finally be reversed — but time is running out

Technical ly ^ | April 3, 2025 | Christopher Wink

[AndyTheBear]

A bipartisan bill reintroduced in Congress last month could offer long-awaited relief to small tech companies hit hardest by an obscure federal tax change — one that many founders say is threatening their survival.

The American Innovation and R&D Competitiveness Act of 2025 (HR 1990), introduced last month by US Reps. Ron Estes (R-KS) and John Larson (D-CT), would restore the ability for companies to immediately take tax deductions on research and development costs, including software development labor.

The act would undo the controversial Section 174 change that took effect in 2022, which now requires businesses to amortize those costs over 5 to 15 years. The change hit companies of various sizes and types that fit under R&D, from tech behemoths to science labs. But small software firms with limited cash reserves warned of an extinction event.

[AndyTheBear]

This is about the possible repeal of US Tax Code 174 which went in to effect in 2022 and made it much harder for start ups to hire software developers.

[maro]

To be accurate, the repeal of an amendment to Section 174. We want the old Section 174 back.