The HITS Act Explained: How Immediate Write-Offs Fix a Cash-Flow Problem Artists Have Always Had

Why it exists, what’s actually new, and why “you could already deduct expenses” misses the point

Every few years, something passes through Congress that sounds helpful to artists but gets misunderstood almost immediately.
The HITS Act is one of those things.

You’ve probably seen it framed like this:

“Artists can now deduct recording costs. Big win!”

And then the immediate pushback:

“You could already deduct business expenses. This changes nothing.”

Both statements are partially true.
But the second one misses the entire reason the HITS Act exists.

Let’s clear it up.

The Problem the HITS Act Was Designed to Fix

Yes, artists could always deduct business expenses.
That was never the issue.

The issue was timing.

Before the HITS Act, recorded music was treated as a capital asset, not a normal operating expense.

That meant:

• Recording an album wasn’t deducted immediately

• Costs were capitalized and amortized

• Deductions were spread over years

• Often long after the artist actually paid the bills

So while you might spend $20,000 recording an album this year, the IRS didn’t let you deduct that $20,000 this year.

You got a slow drip of deductions while the cash was already gone.

For independent artists, that’s brutal.

What the HITS Act Actually Changes

The HITS Act allows recording costs to be deducted immediately instead of amortized over time.

That includes:

• Studio time

• Mixing and mastering

• Producer fees

• Session musicians

• Engineering costs

In plain English:

Money spent making music can now reduce your taxable income in the same year you spend it.

That’s the difference.

“But I Could Always Deduct Studio Time”

This is where people get tripped up.

Yes, expenses were deductible eventually.
But not all deductions are created equal.

Immediate deductions:

• Reduce this year’s tax bill

• Improve short-term cash flow

• Lower estimated quarterly taxes

• Reduce the risk of paying tax on money you don’t actually have

Amortized deductions:

• Lag behind reality

• Help later, when you may not need them

• Are useless if you burn out, quit, or never recoup

For artists operating on thin margins, timing is everything.

Why This Matters More for Indie Artists Than Major Artists

Major labels don’t care about this nearly as much as indie artists do.

Why?

• They already expense across massive portfolios

• Losses are offset elsewhere

• Cash flow isn’t personal survival money

Independent artists:

• Pay recording costs out of pocket

• Operate as sole proprietors or small LLCs

• Feel tax pressure immediately

• Are often paying taxes while still reinvesting everything back into music

The HITS Act is a cash-flow fix, not a generosity move.

What the HITS Act Does Not Do

This is where expectations get out of control.

The HITS Act does not:

• Create free money

• Make music profitable

• Guarantee refunds

• Override bad accounting

• Replace proper business structure

If you didn’t track expenses before, this won’t save you.
If your music never generated income, this won’t magically change that.

It simply aligns tax reality with financial reality.

Who Benefits the Most

You benefit the most if you:

• Actively release music

• Spend real money recording

• Generate at least some taxable income

• Are reinvesting earnings into production

• File as a business (or should be)

If you release sporadically and spend $200 every two years, this isn’t life-changing.

If you drop projects consistently and invest thousands per release, this matters.

The Bigger Picture

The HITS Act is not a “music industry savior.”

It’s a quiet correction.

It acknowledges that recorded music isn’t some long-term industrial asset anymore.
It’s operating inventory for modern creators.

And for once, the tax code caught up.

The Payusnomind Take

This is one of those changes that:

• Won’t trend on TikTok

• Won’t make headlines

• Won’t help people who don’t already treat music like a business

But for artists doing things right, it removes unnecessary friction.

Not flashy.
Not revolutionary.
Just practical.

And honestly, that’s exactly what artists actually need.