Small Business Tax Credits: 10 Credits That Could Save You Thousands in 2026

Most small business owners know about tax deductions, but far fewer take advantage of tax credits—which are significantly more valuable. While a deduction reduces your taxable income, a credit reduces your actual tax bill dollar for dollar. A $5,000 deduction might save you $1,100 in taxes, but a $5,000 credit saves you the full $5,000.

Despite this, billions of dollars in tax credits go unclaimed every year because business owners either don't know they exist or assume they don't qualify. Here are ten credits worth investigating for your business in 2026.

Understanding the Difference: Tax Credits vs. Tax Deductions

Before diving into specific credits, it's important to understand why credits matter so much more than deductions.

Tax deductions reduce your taxable income. If you're in the 22% tax bracket and claim a $10,000 deduction, you save $2,200 in taxes.

Tax credits reduce your tax liability directly. A $10,000 tax credit saves you exactly $10,000—regardless of your tax bracket.

Some credits are even "refundable," meaning if the credit exceeds your tax bill, you receive the difference as a refund. Others are "nonrefundable," meaning they can reduce your tax bill to zero but won't generate a refund on their own.

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

The R&D tax credit isn't just for pharmaceutical companies and tech giants. If your business develops new products, improves existing ones, or creates software, you may qualify.

What qualifies

Activities that qualify include developing new or improved products, processes, software, techniques, or formulas. The key test is whether the work involves technological uncertainty that you're trying to resolve through experimentation.

How much you can save

The credit is worth 6% to 14% of qualified research expenses (QREs), depending on which calculation method you use.

The startup payroll tax offset

This is where it gets especially interesting for newer businesses. If your startup has less than $5 million in gross receipts and hasn't had gross receipts for more than five years, you can apply up to $500,000 of R&D credits annually against your payroll taxes (Social Security and Medicare). This means you can get cash back even if your business isn't profitable yet.

Recent changes for 2025-2026

The One Big Beautiful Bill Act permanently restored the ability to deduct 100% of domestic R&D costs in the year incurred, effective January 1, 2025. This reverses the previous requirement to amortize R&D expenses over five years. If your business amortized R&D costs for 2022-2024, you may be able to file amended returns to claim refunds—but the election deadline is July 6, 2026.

2. Small Business Health Care Tax Credit

If you provide health insurance to your employees, you might be leaving money on the table.

Eligibility requirements

• Fewer than 25 full-time equivalent employees
• Average annual wages below $58,000 (adjusted annually for inflation)
• You pay at least 50% of employee-only premium costs
• Coverage purchased through the Small Business Health Options Program (SHOP)

Credit amount

Up to 50% of the premiums you pay (35% for tax-exempt organizations). The credit is available for two consecutive years.

How to claim it

File IRS Form 8941 and carry the credit to your business tax return. Even if you didn't know about this credit in previous years, you can file amended returns to claim it retroactively.

3. Employer-Provided Childcare Credit

Starting in 2026, this credit gets a major upgrade that makes it significantly more valuable for small businesses.

What changed in 2026

The credit increased to 50% of eligible childcare costs for qualifying small businesses, with a maximum annual credit of $600,000. For larger businesses, it's 40% of costs with a $500,000 maximum.

Qualifying expenses

• Building or acquiring a childcare facility
• Operating a childcare facility (including staffing, supplies, and maintenance)
• Contracting with a licensed childcare provider
• Subsidizing employee childcare costs

Why this matters

Childcare is consistently cited as the number one reason employees leave the workforce. Offering childcare support helps with recruitment, retention, and productivity—and now the government is subsidizing up to half the cost.

4. Disabled Access Credit

Small businesses that make their facilities accessible to people with disabilities can claim this often-overlooked credit.

Eligibility

• Gross receipts under $1 million, OR
• No more than 30 full-time employees

Credit amount

50% of eligible access expenditures between $250 and $10,250, for a maximum credit of $5,000 per year.

Qualifying expenses

• Removing architectural barriers (ramps, widened doorways, accessible parking)
• Providing sign language interpreters or readers
• Purchasing adaptive equipment or devices
• Modifying equipment for accessibility
• Making visual or audible accommodations

This credit covers renovation costs but not new construction. It's claimed on IRS Form 8826.

5. Retirement Plan Startup Costs Credit

If you're starting a new retirement plan for your employees, this credit helps offset the setup costs.

Credit amount

The greater of:

• 50% of qualified startup costs, OR
• $250 per non-highly compensated employee eligible to participate

The maximum credit is $5,000 per year for the first three years of the plan.

Additional auto-enrollment credit

If your plan includes automatic enrollment, you can claim an additional $500 per year for three years.

What counts as startup costs

Administrative costs of setting up the plan, educating employees about the plan, and ongoing administrative expenses during the first three years.

This is claimed using IRS Form 8881 and is a great incentive for businesses that want to attract talent by offering retirement benefits.

6. Paid Family and Medical Leave Credit

If you offer paid leave to employees, you may qualify for a credit that reimburses a portion of the wages you pay during that leave.

What qualifies

Employers who provide at least two weeks of paid family and medical leave to qualifying employees earning $78,000 or less annually (adjusted for inflation). The leave must pay at least 50% of the employee's normal wages.

Credit amount

The base credit is 12.5% of wages paid during the leave period. The credit increases by 0.25% for each percentage point above 50% of normal wages, up to a maximum of 25% for employers paying 100% of wages during leave.

2026 expansion

Beginning in 2026, businesses also have the option to claim a credit for premiums paid for insurance policies that provide paid family and medical leave, giving more flexibility in how you structure your leave program.

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

If you own a commercial building, energy efficiency improvements can generate significant tax savings.

Credit amount

Up to $5.65 per square foot for buildings that achieve a 25% or greater reduction in energy costs compared to a reference building. Partial deductions are available for improvements to the building envelope, lighting, or HVAC systems.

Qualifying improvements

• Energy-efficient lighting systems
• HVAC upgrades
• Building envelope improvements (insulation, windows, doors)
• Solar installations (eligible for a separate 30% investment tax credit)

Who benefits most

Building owners, tenants who make improvements, and designers of government-owned buildings. The deduction resets every few years, so previous claimants can qualify again.

8. Electric Vehicle and Clean Energy Credits

Several credits exist for businesses investing in clean energy and electric vehicles.

Commercial Clean Vehicle Credit

• Up to $7,500 for vehicles under 14,000 pounds
• Up to $40,000 for vehicles over 14,000 pounds
• The vehicle must be used primarily for business purposes

EV Charging Infrastructure Credit

A 30% credit for the cost of installing EV charging stations at your business, up to $100,000 per charger.

Solar Investment Tax Credit

30% of the cost of solar energy systems installed on commercial properties. This credit is available through at least 2032 and can significantly reduce energy costs long-term.

9. General Business Credit Carryforward

Here's something many business owners don't realize: if your tax credits exceed your tax liability in a given year, you don't lose them.

How it works

Most business tax credits can be carried back one year and carried forward up to 20 years. This means a startup that accumulates credits during its early unprofitable years can use those credits to reduce taxes once it becomes profitable.

Strategy

Track all potential credits from day one, even if you don't owe taxes yet. These credits can provide significant tax relief in future profitable years.

10. State and Local Tax Credits

Beyond federal credits, most states offer their own business tax credits that can stack on top of federal savings.

Common state credits

• Job creation credits: Many states offer credits for each new job created, especially in designated economic development zones
• Investment tax credits: Credits for purchasing or leasing qualifying equipment and property
• Training credits: Credits for employee training and workforce development programs
• Historic rehabilitation credits: Credits for renovating historic buildings
• Film and media credits: Credits for production companies (varies widely by state)

How to find your state's credits

Check your state's department of revenue or economic development agency website. Many states also have small business development centers that can help identify applicable credits.

How to Maximize Your Tax Credit Claims

Keep detailed records

Tax credits require documentation. For the R&D credit, you need project-level records showing the technological uncertainty, experimentation process, and qualified expenses. For the healthcare credit, you need SHOP enrollment records and premium payment documentation.

Work with a qualified tax professional

Tax credits have complex eligibility rules and calculation methods. A CPA or tax advisor who specializes in small business credits can identify credits you might miss and ensure proper documentation.

Don't leave money on the table

Many credits can be claimed retroactively by filing amended returns. If you've been in business for a few years and haven't explored these credits, it's worth reviewing past returns.

Combine credits strategically

Many of these credits can be claimed simultaneously. A single business could potentially claim the R&D credit, healthcare credit, retirement plan credit, and energy credits all in the same year.

Keep Your Finances Organized from Day One

Claiming tax credits requires accurate financial records and detailed documentation of qualifying expenses. Beancount.io provides plain-text accounting that gives you complete transparency over your financial data—making it easy to track, categorize, and document the expenses that qualify for these valuable credits. Get started for free and take control of your business finances with a system that's version-controlled, auditable, and AI-ready.