Can you write off your website? A guide for US businesses

A website is one of the more straightforward business expenses in the US tax code, with one complication: the IRS has never published guidance written specifically about websites. Instead, the pieces of a website are taxed by analogy to the things they resemble: software, advertising, ordinary operating costs, and, occasionally, intangible assets. Once you know which piece is which, the treatment is mostly favourable, and the 2025 tax law made it more so.

The costs that are simply ordinary expenses

The Internal Revenue Code lets a business deduct ordinary and necessary expenses of carrying on a trade or business. A large share of what a website costs falls under that heading and is deducted in the year it is paid or incurred, with no special treatment required.

• Hosting, domain name registration and renewal fees, SSL certificates, and email.
• Maintenance, support, and security retainers.
• Routine content updates and the ongoing cost of a content management system or other software subscription.
• Advertising and marketing, which the IRS has long treated as deductible when reasonable and directly related to the business. The IRS's own business-expense guidance listed internet-related expenses, including domain registration fees and webmaster consulting, among deductible costs.

Design, copy, and photography

The parts of a website that are not code, the visual design, the writing, the photography, exist to present the business to customers. Businesses and their advisers commonly treat these as advertising or promotional costs, deductible when incurred, on the reasoning that a website is the modern brochure. Because the IRS has not issued website-specific guidance, this is an area where your CPA's judgment matters, and where a clear, itemised invoice makes that judgment easier to support.

Custom development: Section 174A

The code that makes a custom website work is software, and for tax purposes software development has been treated as a research or experimental expenditure since Congress amended Section 174. Between 2022 and 2024 that was bad news: the Tax Cuts and Jobs Act required those costs to be capitalised and amortised over five years, so a business that paid for a site could not deduct most of it in the year it paid.

The One Big Beautiful Bill Act, signed on July 4, 2025, reversed that for domestic work. New Section 174A allows domestic research and experimental expenditures, expressly including software development, to be deducted in the year paid or incurred, for tax years beginning after December 31, 2024. A business may still elect to capitalise and amortise over at least sixty months if it prefers. Foreign development costs remain subject to capitalisation, which is one practical reason to work with a domestic studio.

There is also relief for the years in between. Small businesses that meet the gross receipts test of Section 448(c) may apply the new rule retroactively to tax years beginning after December 31, 2021, by amending returns for 2022 through 2024. Businesses of any size have options for the amounts still unamortised from those years, including deducting the remainder in 2025 or spreading it over 2025 and 2026. If you paid for a website in that window, ask your CPA whether an amended return is worth filing.

Purchased software, themes, and plugins

Software you buy rather than have written, a licensed theme, a plugin, an off-the-shelf application, is handled differently. Off-the-shelf software that is readily available to the public, licensed non-exclusively, and not substantially modified qualifies for the Section 179 deduction, which for tax years beginning in 2025 allows up to two and a half million dollars of qualifying property to be expensed, with the limit indexed for later years. It also qualifies for bonus depreciation, which the 2025 law restored to one hundred percent, permanently, for property acquired after January 19, 2025. Where neither applies, such software is depreciated straight-line over thirty-six months.

For most small businesses, the effect is the same: the cost is deducted in the year the software is placed in service.

Domain names: registration is not purchase

Registering a domain and renewing it each year is a routine expense. Buying an existing domain from someone else is not. IRS Chief Counsel advice concluded that the cost of acquiring a domain name is generally an intangible that must be capitalised and amortised over fifteen years under Section 197, whether the domain is a trademark or a generic name attached to an existing site. If you are paying a meaningful sum to acquire a domain, plan for that.

Before the business opens: startup costs

If the website is built before the business begins operating, its cost may be a startup expense under Section 195 rather than an ordinary one. A business may elect to deduct up to five thousand dollars of startup costs in its first year, reduced where total startup costs exceed fifty thousand dollars, and amortise the remainder over one hundred eighty months. This changes the timing significantly for a new business, and it is one more reason to involve your CPA before, not after, the project.

Timing: paid or incurred, placed in service

Different rules key off different dates. Ordinary expenses and Section 174A costs are deducted when paid or incurred, which for a cash-basis business is when the money leaves. Section 179 and bonus depreciation apply when the property is placed in service, which for a website is normally the launch. A project that starts in the autumn can land in either year depending on how it is invoiced and when it goes live, so if the year matters to you, say so at the start and plan the schedule around it.

What to ask your CPA

1. Which parts of this invoice are ordinary expenses, which are software development under Section 174A, and which, if any, are startup costs?
2. Should we deduct the development cost this year or elect to amortise it, given where our income is?
3. Did we pay for website or software development between 2022 and 2024, and do we qualify to amend those returns?
4. Is any purchased software or theme better handled under Section 179 or bonus depreciation?
5. Are we buying an existing domain, and if so, have we budgeted for fifteen-year amortisation?
6. Does our state follow the federal treatment?

How we make this easier

Our invoices separate the build from the ongoing work, and within the build they distinguish development from design, content, and photography, because those lines are taxed by different rules. If your CPA asks for a particular breakdown, we will provide it. Scope and starting points are on our pricing page.

One thing to know about hiring us from the US

We are in Ontario. Section 174A's immediate deduction is for domestic research, and the statute turns on where the work is performed, not where the client is. Development we carry out for a US business is therefore foreign research for this purpose, and the software-development portion of our invoice would be capitalised and amortised over fifteen years rather than deducted in the year paid. The design, content, photography, hosting, and care lines are not affected, because they are not research expenditures in the first place. We would rather tell you this on the page than have your CPA discover it in April. If the timing of that one line matters to you, raise it before we scope the project; the split between development and everything else is something we can show you in advance.

Sources

• Morgan Lewis — New Section 174A restores domestic R&E deductibility
• Plante Moran — One Big Beautiful Bill Act restores expensing of domestic Section 174 costs
• IRS — Publication 946, How to Depreciate Property (off-the-shelf software, Section 179 limits)
• IRS — Publication 535 (2022), Business Expenses (discontinued; internet-related expenses)
• IRS — Tax Tip 2021-159: small business advertising and marketing costs
• IRS Chief Counsel Advice 201543014 — acquisition costs of domain names
• IRS — Rev. Proc. 2000-50 (historical treatment of software development costs)
• Section179.org — 2026 Section 179 limits and bonus depreciation