# What expense category is Microsoft Software? Microsoft Software is classified as a Restaurants expense. Microsoft 365 is a cloud-based SaaS productivity suite including Office apps (Word, Excel, PowerPoint), Teams, Outlook email, OneDrive storage, and optional Copilot AI, billed per user per month. **URL Source:** https://www.brex.com/tools/expense-classifier/microsoft-software --- > **Note:** This content was automatically generated from the HTML page because structured content was not available. # What expense category is Microsoft Software? Microsoft Software is classified asRestaurants·Fully deductible Microsoft 365 is a cloud-based SaaS productivity suite including Office apps (Word, Excel, PowerPoint), Teams, Outlook email, OneDrive storage, and optional Copilot AI, billed per user per month. At a Glance CategoryRestaurants Tax statusFully deductible Avg. spend$6–$38/user/month depending on plan tier; a 10-person business typically spends $720–$2,640/year Never guess about charges again Brex automatically identifies every transaction for you. Get started [See Brex in action →](/book-a-demo) Microsoft 365 (formerly Office 365) is Microsoft's flagship subscription-based productivity platform for businesses. It delivers desktop and web versions of Word, Excel, PowerPoint, Outlook, and Teams, along with 1 TB of OneDrive cloud storage per user, SharePoint, and optional AI features via Copilot add-on. Plans are priced per user per month on annual commitments, ranging from $6 (Business Basic) to $22 (Business Premium) for SMBs, and $8–$38+ for enterprise tiers. Because users access the software via subscription and never hold a perpetual license, this is a fully deductible SaaS operating expense. Note: the vendor's assigned category of 'Restaurants' in the source data is incorrect — Microsoft 365 is unambiguously a SaaS product. ## How businesses classify Microsoft Software RestaurantsMost common100% 100% of transactions classified under Restaurants ## Tax details Fully deductible Capital vs. Operating Operating expense — subscription fees are fully deductible as ordinary business expenses Section 179 Not eligible for Section 179 Documentation tips - Microsoft 365 is billed per user per month — reconcile your active user count quarterly to avoid paying for departed employees' licenses. - Retain the Microsoft 365 admin center invoice each billing cycle; it details per-user costs and plan tiers, which is useful for allocating costs across departments. - Annual prepaid Microsoft 365 plans can be deducted in full in the year paid if your business uses the cash accounting method. - Copilot AI add-on fees ($18–$30/user/month) are also deductible SaaS costs — track these as a separate line item if material. - If Microsoft 365 licenses are provided to employees as a business tool, the cost is fully deductible; if any licenses are used for personal purposes only, that portion should be excluded. ## Business insights Average spend $6–$38/user/month depending on plan tier; a 10-person business typically spends $720–$2,640/year Common industries Professional ServicesHealthcareEducationRetail & HospitalityFinancial ServicesManufacturingNonprofit ## Related expenses [Linkedin Premium](/tools/expense-classifier/linkedin-premium)[Starbucks](/tools/expense-classifier/starbucks)[Googleplex](/tools/expense-classifier/googleplex)[Airbnb](/tools/expense-classifier/airbnb)[Exxon Mobil](/tools/expense-classifier/exxon-mobil) What category is another expense? Search 93\+ vendors and expenses For illustrative purposes only. Results shown are estimates and not guarantees. Based on internal metrics. Past performance does not guarantee future results, which may vary.