Small- and medium-sized businesses may qualify for myriad tax credits that can help defray the taxes you may owe. In addition to the R&D tax credit that I recently covered in depth, you should consider talking to your tax professional about the following to see if they may suit you.
General Business Tax Credit. This covers a variety of credits rather than just one, and can help you get credit for such activities as buying certain electric vehicles, starting a pension plan, breaking into new markets, producing low-sulfur diesel fuel, or performing mine rescue team training. There are dozens of line items on the form for which you might qualify, so this is a great place to start when evaluating your tax credit options.
Family and Medical Leave Credit. If you provide paid family and medical leave to your employees, you could potentially qualify for this tax credit. The credit itself will be calculated based on a percentage of the wages you paid to staff members while they were on family and medical leave.
Work Opportunity Credit. Businesses that hire individuals from specific target groups that have faced barriers to employment may qualify for this tax credit. The government classifies these into 10 categories, including food stamp/SNAP recipients, ex-felons, long-term family assistance recipients, unemployed veterans and others. You can qualify for up to $9,000 in savings over a two-year period using these credits.
Small Business Health Care Tax Credit. Businesses that have fewer than 25 full-time employees may qualify for this credit if they pay average wages of less than $50,000 annually per full-time equivalent. You must offer a qualified health plan to your employees through the Small Business Health Options Program Marketplace and pay at least half of the cost of the employee only (but not for the employee’s family).
Disabled Access Credit. If you’ve made your facilities or offices accessible to people with disabilities, you could be eligible for this tax credit. It requires you to have a total revenue of $1 million or less and employ 30 or fewer people. The credit will help cover up to half of your expenditures on disabled access, with a maximum credit of $5,000 if you spend $10,000.
Alternative Motor Vehicle Credit. If your business buys a vehicle that takes an alternative fuel source, you could get a tax credit of up to $8,000. Buying a qualified fuel cell vehicle with four wheels might make you eligible you for this credit in certain circumstances, assuming you meet the requirements. You must own (not lease) the vehicle, place it in service during the tax year, and meet a few other criteria to ensure you meet the requirements.
This list covers a few of the more common tax credits that small- and medium-sized businesses might want to investigate, but it’s not an exhaustive list. Reach out to your tax professional to get the scoop on all of the tax credits that might allow you to save some money at tax time.