The Trump administration and the Republican-led Congress is trying to overhaul the tax code, and if they are successful it could have positive implications for a handful of software stocks including big names such as Microsoft Corp. (MSFT) and Adobe Systems Inc. (ADBE) and lesser-known ones like Alarm.com Holdings Inc. (ALRM) and The Ultimate Software Group Inc. (ULTI​).

That’s the takeaway from Credit Suisse, which looked at the implications tax reform will have for the software industry. In a research report, Michael Nemeroff and his team of analysts said that a lower corporate tax rate in which it gets reduced to 20% from 35% would bode well for software companies for a variety of reasons. (See more: Trump's Tax Reform Plan.)

Global Implications

Take the proposed change to the tax system in which it would result in U.S. businesses not having to pay taxes on overseas earnings. That, according to Credit Suisse, would be particularly beneficial to multinational software companies including Autodesk Inc. (ADSK), Microsoft, Adobe and Salesforce.com Inc. (CRM). What’s more, the proposed tax repatriation break in which companies may be able to bring money back into the U.S. at a lower tax rate will help software companies with a lot of money overseas, namely Microsoft. According to Credit Suisse, the software giant has around $128 billion in cash in foreign units. (See more: Tax Reform Should Bode Well for Charles Schwab.)

The tax plans also calls for a simplified tax code, reducing the number of tax brackets for individuals to three from seven and removing a large portion of the itemized tax deductions. That, said the Wall Street firm in a note covered by Barron’s, will bode particularly well for Intuit Inc. (INTU). “We do not believe that the proposed simplification of the tax code will negatively impact DIY tax software providers as the individuals who traditionally utilize those offerings likely will not notice a dramatic change in the complexity of their tax situation,” wrote Nemeroff.” Rather, we expect the assisted tax category to potentially suffer from the reduction in complexity that could result from the elimination of itemized tax deductions; individuals that had previously been served by professional accounts could instead move to DIY software solutions, like TurboTax, at a much lower cost.”

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