Act now before it's too late: Section 174

What It Covers

Section 174 tax code changes force US software companies to amortize development expenses over five to fifteen years instead of deducting them immediately, causing tax bills to increase 300-400% and threatening small business survival.

Key Questions Answered

• •Tax Impact Scale: Software companies face tax increases from $75,000 to $225,000 annually because Section 174 now requires amortizing all development costs including salaries, servers, UI libraries, and contractor expenses over multiple years instead of immediate deduction.
• •Amortization Timeline: US-based development expenses must be spread over five years while foreign contractor costs require fifteen-year amortization, making remote teams with international developers significantly more expensive and forcing potential time-tracking requirements for all development activities to separate maintenance from new features.
• •Cash Flow Crisis: Bootstrapped companies running lean operations without large cash reserves cannot cover unexpected tax bills because they distribute most profits annually, lack access to credit markets, and cannot wait twelve months for potential refunds if legislation gets reversed.
• •Advocacy Deadline: Small software businesses must sign the coalition letter at ssballiance.org by April 10 to deliver congressional testimony before tax day, demonstrating that Section 174 affects mom-and-pop software shops across all fifty states, not just big tech companies.