Section 174 Deduction Calculator for Software R&D
For US software developers, indie hackers, startup founders, and finance teams who need to estimate R&D tax deductions under Section 174. Instantly see your annual amortization deduction and how much tax you could save if immediate expensing is restored—so you can plan cash flow and make smarter tax decisions.
Results update live as you type — no button needed. The Example button fills a sample input.
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Why use Section 174 Deduction Calculator?
Compare current Section 174 amortization vs. restored immediate expensing side by side
Get your estimated annual deduction and potential tax savings in seconds
Built for software R&D expenses—no complex accounting software needed
Clear comparison table to visualize the real impact on your taxes
Free, fast, and no sign-up required
FAQ
What is Section 174 and how does it affect software developers?
Section 174 of the US tax code governs how R&D expenses are deducted. Under current rules, software development costs must be amortized over 5 years (domestic) or 15 years (foreign), rather than deducted immediately. This calculator helps you estimate your annual amortization deduction and compare it to the potential savings if immediate expensing is restored.
How does the calculator estimate my tax savings?
It computes the difference between the immediate deduction (if expensing is restored) and the current amortization deduction for the year, then multiplies that difference by your tax rate to estimate the tax savings.
Is this calculator accurate for my specific situation?
This tool provides estimates based on the inputs you provide and simplified Section 174 rules. It is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional for your specific circumstances.
What does 'restored immediate expensing' mean?
It refers to a hypothetical or proposed tax rule change that would allow businesses to deduct R&D expenses in the year they are incurred, rather than amortizing them over several years. This calculator lets you compare that scenario against current law.