KPMG article: Need to modernize definition of software for domestic manufacturing incentive
Reasons why Congress should update the definition of software to align with modern changes in technology
If former section 199, or a variation of it, is revived to provide a domestic manufacturing incentive in an upcoming tax bill, Congress needs to modernize the definition of software in the context of domestic manufacturing to account for the expansion of the industry and the very significant evolution of technology that has occurred in the last two decades since the former section 199 rules were first introduced.
Read a May 2025 article* prepared by KPMG LLP tax professionals that also explains how recent court decisions, such as Express Scripts, highlight the fact that taxpayers engaged in certain software development activities may be excluded, perhaps inadvertently, from this potential rate reduction unless the definition of manufacturing and software is modernized.
*This article appears in Tax Notes Federal (May 5, 2025) and is provided with permission.