New Opportunity in the 2025 Taxes

~260 word | ~1 min read

Disclaimer: To be clear, I am NOT a tax professional.
Consult your accountant before acting on anything you learn from this article!

Sometimes Washington walks right into your office, and move the furniture! Or at least it can feel like that. I just finished writing up a review of the R&D Tax credit, and it’s implications. Then I learned there is yet another change in effect! But by being aware of the business implications, we can better partner with our organization. So, Let’s take a look.

The latest modifications offer some welcome news for onshore development teams. We can claim most software projects as expenses under the R&D Tax rules again! We still need to pass the four-part tests. But this means that our business’ cash-flow will be much better. At least for software developed onshore! But of course, there’s a catch.

Cloud-Developer Tools, and other Saas Products are now subject to new taxes. That means that your business’ bottom-line is going to take a bigger hit for tooling. My attention immediately goes to pay-per-use type subscriptions which this may impact. With the rise of AI-development tools, our daily use may increase that tax-exposure.

Realistically, there are two things we can do with this information. The first is our user stories and features. Make sure then have enough information to help classify them for the four-part test for R&D credits. Thus reviewing the four-part test would be prudent. The second thing, is reviewing our development tool use. How much improvement do you get from each? What kind of subscription is it (usage bucket, seats, etc.)? And what would a locally run alternative look like?

We can present new value-added options to our organizations. It just takes some awareness, and a bit judicious research.

Author’s Note: I used Perplexity while researching this topic. The content remains human-written.