They were going to undo at least the inside-US portion of the Section 174 amendment.
It’s made it past the House but not the senate yet. [0]
What’s strange is “Effectively, this rule change [initial Section 174 amendment] was designed to encourage enterprises to shift software development activities and the related expenses to the US due to the more favorable tax treatment.” [1]
But seems outsourcing to outside-US has only increased?
Outsourcing has not increased, because non-US R&D costs are not deductible (with very limited exceptions).
What has changed is that companies are re-evaluating the value of "tech"-related expenditures now that they have to account for them the same way they account for other R&D activities, and have generally found that tech expenditures don't have the ROI originally forecast (largely due to being too optimistic when forecasting, but that's what happens when an industry sells itself through a perpetual hype cycle instead of on fundamentals).
> But seems outsourcing to outside-US has only increased?
In addition to u/gamblor956's answer, for companies that are outsourcing, these decisions aren't only driven by price considerations - distributing teams to deliver in parallel does speed up delivery. And for a lot of subfields in software, the talent pipeline doesn't exist anymore in the US (eg. anything Systems adjacent).
And finally, the layoffs that happened during COVID and in 2023-24 overimpacted workers on visa statuses like H1B, EB1/2, etc, so you had a pretty decent chunk of American trained engineering, product, and marketing talent abroad now who can act as interlocutors between American companies and local talent.
It’s made it past the House but not the senate yet. [0]
What’s strange is “Effectively, this rule change [initial Section 174 amendment] was designed to encourage enterprises to shift software development activities and the related expenses to the US due to the more favorable tax treatment.” [1]
But seems outsourcing to outside-US has only increased?
[0]: https://www.congress.gov/bill/118th-congress/house-bill/7024
[1]: https://www.corumgroup.com/insights/major-tax-changes-us-sof...