Save Now On Tech Investments - Take Advantage of Custom Software Tax Credits

Nov 8, 2023

By understanding the requirements, leveraging the expertise of a qualified development organization, and working with a franchise tax credit professional, businesses can take full advantage of these tax incentives and make their custom software projects more affordable.


Are you a business owner looking to invest in custom software for your company? Before shelling out a large sum of money on development, have you considered the potential tax benefits that could save you hundreds, or even thousands, of dollars? That's right, custom software tax credits can help make your tech investments more affordable. In this article, we will explore the numerous benefits and opportunities that come with leveraging custom software tax credits.

Benefits of Developing Custom Software

Before we delve into the specifics of custom software tax credits, let's first discuss the overall benefits of investing in custom software for your business. Custom software is specifically tailored to meet the unique needs and requirements of your company, unlike off-the-shelf software which may not have all the necessary features. This means that custom software can greatly improve your business's efficiency, productivity, and overall operations.

Furthermore, custom software can give you a competitive edge in your market. As technology continues to advance, having specialized software that meets your business's needs can set you apart from your competitors. Additionally, having a custom software solution can also help you save money in the long run by reducing maintenance costs and decreasing the need for manual labor.

Cost of Developing Custom Software

Of course, with all the benefits that come with custom software, business owners often worry about the high costs associated with its development. However, there are ways to make the investment more affordable, such as leveraging custom software tax credits.

Custom Software Tax Credits

What are Custom Software Tax Credits?

Custom software tax credits are federal incentives designed to encourage businesses to invest in custom software development. These tax credits are offered to businesses as a way to lower the cost of developing custom software, making it more accessible and affordable.

How Do Custom Software Tax Credits Work?

Through tax credits, businesses can reduce their tax liability by deducting a percentage of their qualified software development costs. This means that the amount of tax you owe to the government can be significantly reduced, thus making your tech investments more cost-effective.

Who Qualifies for Custom Software Tax Credits?

While the details may vary depending on your location, most small and medium-sized businesses are eligible for custom software tax credits. Even start-ups and individuals who are self-employed can also qualify for these tax credits.

What are the Requirements to Qualify for Custom Software Tax Credits?

To qualify for custom software tax credits, the software development project must meet certain requirements set by the government. These requirements can include factors such as the type of technology used, the purpose of the software, and the level of innovation involved. It is essential to consult a tax professional who specializes in this area to ensure you meet all the necessary requirements.

Leveraging Custom Software Tax Credits

Understanding the Requirements

To effectively leverage custom software tax credits, it is crucial to understand the requirements that your software development project must meet. This includes identifying a qualified development organization and determining the eligible tax credits.

Identifying a Qualified Development Organization

A qualified development organization is a company that is recognized by the government and has the knowledge and expertise to develop custom software solutions. When choosing a development organization, it is essential to do your research and choose one that has a proven track record of successfully completing projects and obtaining tax credits for their clients.

Determining Eligible Tax Credits

There are various types of custom software tax credits, and the amount you can claim will depend on the specific tax credit your business is eligible for. These tax credits can also differ depending on your business's location, which further emphasizes the need to work with a qualified development organization who understands the tax laws in your area.

Calculating the Financial Impact of the Credits

One of the significant benefits of custom software tax credits is the potential financial impact it can have on your business. To fully understand the financial impact, it is essential to calculate the amount of tax credit your business can claim and how it will affect your overall tax liability. A tax professional can assist you in this process to ensure accuracy and maximize your savings.

Finding the Right Franchise Tax Credit Professional

To ensure you are taking full advantage of your available custom software tax credits, you may also want to consider working with a franchise tax credit professional. These professionals specialize in identifying, obtaining, and maximizing available tax credits for businesses. They can help guide you through the complex process of claiming tax credits and ensure you are not missing out on any potential savings.


In conclusion, custom software tax credits provide a valuable opportunity for businesses to reduce the cost of their technology investments. By understanding the requirements, leveraging the expertise of a qualified development organization, and working with a franchise tax credit professional, businesses can take full advantage of these tax incentives and make their custom software projects more affordable. With the numerous benefits and potential savings, custom software tax credits should not be overlooked by any business looking to invest in technology.