Top Tax Credits Available for Small Business Owners

Top Tax Credits Available for Small Business Owners

When you’re running a small business, every dollar counts—and taxes can easily eat into your hard-earned profits. While most owners focus on deductions, tax credits are often overlooked. And that’s a missed opportunity. Unlike deductions, which reduce your taxable income, credits reduce your actual tax liability—dollar for dollar.

That’s a big deal.

Yet with the complexity of tax law and the constant changes each year, it's easy to miss out on the credits you're legally entitled to. In this article, we'll walk through some of the top federal tax credits small business owners should have on their radar—and how to approach them without getting overwhelmed.

1. Small Business Health Care Tax Credit  

If you provide health insurance to your employees, you might qualify for the Small Business Health Care Tax Credit. This one is geared toward businesses with fewer than 25 full-time equivalent employees who pay average wages below a set threshold and cover at least 50% of employees’ premiums.

The credit can be up to 50% of premiums paid. That’s not just helpful—it can be game-changing, especially for owners trying to stay competitive in attracting talent.

However, there’s a catch: you must purchase coverage through the Small Business Health Options Program (SHOP). It’s not automatic, but it’s worth looking into if you meet the requirements.

2. Work Opportunity Tax Credit (WOTC)  

Hiring can be expensive. The Work Opportunity Tax Credit offers relief if you hire individuals from targeted groups that face barriers to employment—such as veterans, ex-felons, or long-term unemployed individuals.

The credit ranges from $1,200 to $9,600 per qualified employee, depending on the category and hours worked. You’ll need to submit paperwork (Form 8850) to your state workforce agency within 28 days of hiring to be eligible.

If you’re already planning to grow your team, this credit could reduce costs while also giving someone a second chance.

3. Research and Development (R&D) Tax Credit  

Don’t let the name mislead you. This isn’t just for labs and tech startups. If your business is improving products, processes, or software—even if the outcome is uncertain—you might qualify.

The R&D tax credit helps offset expenses related to innovation, including employee wages, materials, and contractor costs.

This credit is especially relevant for manufacturers, engineers, software developers, and even certain retailers who tinker with in-house systems. It’s nuanced and may require documentation, but the benefits can be substantial.

4. Employee Retention Credit (ERC)  

While the Employee Retention Credit was created during the COVID-19 pandemic, many small businesses are still eligible to retroactively claim it if they kept employees on the payroll during periods of hardship in 2020 or 2021.

The ERC can be worth tens of thousands of dollars per employee, depending on wages paid and the eligibility period.

Yes, the rules are a bit tangled—and yes, the IRS is closely watching for abuse—but if your business was affected by government shutdowns or revenue losses, this is a credit worth investigating.

5. Disabled Access Credit  

Accessibility isn’t just the right thing to do—it can be tax-savvy too. If your business spent money to improve access for individuals with disabilities (such as installing ramps, updating bathrooms, or providing accessible materials), you could claim up to $10,250 in eligible expenses—half of which (up to $5,000) may be returned to you as a tax credit.

The credit is available to businesses with gross receipts under $1 million or fewer than 30 full-time employees. So yes, this was built for small businesses.

6. Family and Medical Leave Credit  

If you offer paid family or medical leave to employees, this credit rewards you for doing so. Qualifying employers can claim a percentage of wages paid to employees on leave (under the Family and Medical Leave Act).

To qualify, the leave policy must offer at least two weeks of paid leave annually and meet specific wage requirements. The credit ranges from 12.5% to 25% of the wages paid, depending on how generous your benefits are.

If you're building a supportive workplace culture, this credit can offer tangible savings.

7. Energy-Efficient Commercial Building Credit (Section 179D)  

This one’s not talked about enough, but it can be a valuable asset in tax planning for small business owners in Fort Worth, TX. If you’ve invested in energy-efficient upgrades—think LED lighting, high-performance HVAC systems, or improved insulation—your commercial property may qualify for a tax credit under Section 179D.

This credit is especially beneficial for businesses operating in warehouses, retail spaces, or office buildings that are undergoing renovations. Not only do these upgrades contribute to sustainability and lower long-term utility costs, but the credit helps you recoup part of that initial investment. It’s a win-win that supports both your bottom line and the environment—exactly the kind of strategy smart tax planning should include.

Don’t Leave Money on the Table  

With all these opportunities available, why do so many business owners still overpay on taxes? Simple: they don’t know the credits exist, or they assume they don’t qualify.

This is where highlighting the value of proactive tax strategy becomes critical. Whether you’re exploring credits on your own or working with a tax pro, the important part is doing it before filing season hits.

If you're ready to take a deeper dive into how to layer credits into a long-term strategy, explore our complete guide on Tax Planning for Small Business Owners: Stay Compliant, Save More. It breaks down the big picture so you can stay ahead.

Conclusion: Credits That Could Change Your Bottom Line  

Tax credits aren’t just line items—they can be catalysts for smarter decision-making, better hiring, and meaningful reinvestment in your business. But like anything valuable, they take effort to uncover and apply correctly.

Start small. Choose one credit from this list that fits your current goals or plans. Maybe it’s time to offer paid family leave, or maybe you’re already making energy-efficient upgrades. Whatever your angle, get curious. Look deeper. Ask more questions.