Section 174 Changes Impact R&D Tax Credits for Software The new changes to Section 174 have a significant impact on software development costs. For tax year 2022, any cost that has been paid or incurred related to software development is now considered a Section 174 R&E expenditure. This means it must be capitalized and amortized over 5 Offsetting Section 174 R&E Software Development Tax Liability With R&D Tax Credits