OBBB signed: Reinstates immediate expensing for U.S.-based R&D

Meanwhile, in Canada, not only can you expense R&D, but there is a cashable tax refund that will give you back about 60% of your developers’ salaries…

I hate to see this, but you’re comparing two completely different systems. Like it or not, but Canada is much more “socialist”, you can’t expect it in any case to be like US or viceversa.

So it means that indirectly, developers' salaries are not a taxable income in Canada if they are working on R&D? Meaning, they do pay taxes on their income, but their employer gets those taxes back, so if tax is 60%, the employer could pay 250% of what they'd pay otherwise, get 150% back, then the developer pays 150% of taxes, and gets 100%, so in effect the salary is tax-free. Is that what you meant to say?

If so, it sounds almost too good to be true. Why aren't all startups in Canada?

You can only expense Canadian R&D expenses; meaning anything that is not completely used up almost immediately is treated as an asset. This makes almost no difference for software development, but is very important (and disadvantageous) in more capital-intensive industries.

There are many limits on SR&ED, and the reporting/auditing process is burdensome. Canada also suffers from a variety of other inconveniences, mostly related to its dependence on resource extraction-related industries.

Canada's lack of startups is heavily cultural.

We adopt new products less. We are far more risk averse about purchasing goods or services from startups, far more risk averse about funding them (founders often give personal guarantees to get the investment), value the equity startups offer at far less, etc. Government is far more fussy about accountability with that refundable R&D money, so lots of time is spent filling out paperwork and hiring consultants to do it.

Here is a video that explains a lot about Canadian purchasing:

https://www.cbc.ca/player/play/video/1.4596459

There is something similar in France, the Crédit Impôts Recherche (CIR), I remember it was around 50%. I've heard it's going to disappear though, there were abuses.

Yeah, I never thought of it that way. Your plan sounds great, but, in practice how it works is you get paid about half of what you would get in the US. Currently less than half due to the unusual currency exchange rates.

Hi, CIR expert here, it's well and alive. There has been a communication push against it last year but relatively over. It's 30% of R&D expenses as a tax cut. Update: I think the 50% you mention is related to non salary expenses CII = a smaller similar system for innovation, which we differentiate from R&D. CII used to cover non salary expenses with a 50% forfait but this part has been removed indeed. It still covers 20% of salary expenses.

"There are abuses" is really an understatement. "It's mostly abuse and there might be some legitimate beneficiaries" would be more correct.

I saw a chart that added the market value of government support to income for US persons, and it used the term "household resources." I'd like to see a table of household resource distributions for Canada and the US.

Canada is "much more socialist" in that it has socialized medical insurance. Aside from that, it's maybe a tiny bit more socialist, though one could argue it's not more socialist at all.

The systems are different, but saying they are completely different is really a stretch. There's a GST that the US doesn't have, which is, ironically, a regressive tax. If you ranked the tax code of countries by similarity to the US tax code, I'm not sure Canada would be at the top of the list, but it wouldn't be that far down.

It's hackernews, not Elon Musk's X or the French parliament, please bring sources and precise details.

I don’t think this is uniquely Canadian. And it’s usually semi-rational, if you really hate dealing with switching. Most cheaper subscription providers will give you a good deal at first, then jack up the prices when they’re bought by a major provider. New cheaper providers are founded, and the cycle continues. The cheaper prices last for two or three years, or similarly short. Most people would rather take the loss than having to pay attention to this stuff.

It's quite common knowledge :) if you want journalist material, I think there was a Cash Investigation on the topic a few years ago.

I have discussed this topic with many other engineers (known from engineering school, from working 13+ years in the Paris tech startup ecosystem and from my worker union, whose scope include most tech companies) and I have never heard any of them saying they did not write bullshit CIR reports for bullshit projects. I have myself written my fair share of those bullshit reports. There are even companies whose business is to write the bullshit reports for you in exchange for x% of your CIR credit. I worked with such company.

Meanwhile in one of the world's higest taxed welfare states, where you absolutely can deduct 100% of SW developer salaries I feel I've been taking crazy pills every time reading these threads. It's almost as if some folks in """Hacker""" News wanted this law to stay to further cement gigantic incumbents and make it impossible for bootstrapped companies to compete.

It's also capricious. I've been in companies doing legitimate r&d who would spend man months preparing for the CIR only to get it rejected, while they got it in previous years for much less interesting work.

The cultural bit is underrated. Tobias Lütke from Germany is the co-founder and CEO of Shopify has written about this issue of Canadian business culture extensively. Also, the ecosystem of VCs in the US are unmatched globally. And, the internal market in US is f'ing huge.

It's 35% of eligible spend on up to $3 million, and 15% above that (15% and 15% if the corporation is not Canadian). Further, most software development simply doesn't qualify-

https://www.canada.ca/en/revenue-agency/services/scientific-...

If you're making websites or doing Shopify integrations, etc, that doesn't actually qualify.

Something truly novel in AI or self driving or whatever -- sure.

Canada is much more socialist, in your take, so it has more programs for corporations and private enterprise? Huh? This is nonsensical.

Further, it's incredibly difficult to quantify countries on this purported socialism scale. Sure, Canada has universal healthcare like every single developed country but the US, but otherwise it's much more of a mixed bag. The US has always been vastly more "socialist" than its advocates think -- the military is a colossal make work project and is straight out of Soviet doctrine for central planning -- and of course the entire agricultural industry exists under a massive subsidization regime, but under the current administration....whoa.... There is no Western country that has a central planned economy, with a president that is taking direct control of corporations (US Steel) and demanding ownership of corporations (TikTok), while enlisting private executives as members of the military exactly like China (https://www.theguardian.com/technology/2025/jun/25/meta-exec...), all while saying the entire economy is a "store" that he has sole control over. Absolutely no one in the US, looking very Stalinesque ala the late 1930s, should be throwing stones about socialism.