[mempko]

Most people are missing is that there was a tax code change as part of the Trump tax cuts that made engineers much more expensive in the short term. Companies, especially startups, were hit with a high tax bill. The layoffs are, I believe, a direct result of this tax change.

[rogerallen]

Found this HN thread https://news.ycombinator.com/item?id=38633668

[PaulHoule]

Yes! And so few people are talking about this one.

[rogerallen]

Would like to hear more about this. I thought there was an effort to adjust this...did that fail?

[xutopia]

Wait... how can I learn more about how this affects engineers?

[sifar]

This is a good explanation.

https://blog.pragmaticengineer.com/section-174/

A recent bill has given relief for the domestic amortization but is still stuck in the senate.

https://gop-waysandmeans.house.gov/wp-content/uploads/2024/0...

[ricktdotorg]

look up "IRS Section 174 changes". here is a decent link, specific to startups[0].

but a simplified TL;dr is that companies used to be able to expense that year's R&D costs (including salaries for developers etc) in that same taxable year. now, that is no longer the case, and companies must amortize those R&D costs over 5 years.

this is not ideal.

[0] https://www.axios.com/2024/01/20/taxes-irs-startups-section1...

[senordevnyc]

My suspicion is that the vast majority of companies out there (especially small companies) are just not complying with this change. It's such a stupid, company-ending change that it makes way more sense to just classify your engineer time such that you don't have to amortize their salaries, and risk the audit (which is pretty unlikely).