Small businesses often operate with tight budgets, making every dollar count. Fortunately, there are numerous tax credits available that can significantly reduce your tax burden. Here are the most valuable credits every small business owner should be aware of.
1. Work Opportunity Tax Credit (WOTC)
The WOTC rewards employers for hiring individuals from targeted groups, including veterans, long-term unemployed individuals, and recipients of certain government assistance programs. Credits can range from $1,200 to $9,600 per qualified employee.
2. Research and Development Tax Credit
Small businesses engaged in product development, process improvement, or software development may qualify for R&D credits. This credit can offset both income tax and payroll tax for qualifying small businesses.
3. Energy Efficient Commercial Building Deduction
Businesses that improve the energy efficiency of their commercial buildings can claim deductions up to $1.80 per square foot. This includes improvements to lighting, HVAC systems, and building envelope.
4. Small Business Health Care Tax Credit
Small businesses with fewer than 25 full-time equivalent employees that provide health insurance may qualify for a credit of up to 50% of their premium costs.
5. Disabled Access Credit
Small businesses that make their facilities accessible to individuals with disabilities can claim a credit for eligible expenses, up to $5,000 per year.
6. State and Local Credits
Many states offer additional credits for job creation, training programs, and specific industries. These vary by location but can provide significant additional savings.
Getting Help
Navigating tax credits can be complex, but the potential savings make it worthwhile. Consulting with a tax professional who specializes in business credits can help ensure you're taking advantage of all available opportunities.