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Heather Reid • April 18, 2023
Five Federal Tax Credits You Should Know About on Tax Day
Today is Tax Day, and many business owners may be facing a significant tax bill. While it's natural to always seek ways to minimize expenses and increase profits, it's important to explore various programs that can help reduce your tax liability. One of the most underutilized methods to achieve this is by taking advantage of tax credits offered by the federal government. Here are five tax credits that your business can benefit from:
- R&D Tax Credit - up to $250,000 per year: The Research and Development Tax Credit is designed to incentivize businesses to invest in research and development activities. If your business spends money on activities such as creating new products or processes, improving existing products or processes, or conducting research to develop new technologies, you may be eligible for this tax credit.
- WOTC - up to $9,600 per new hire: The Work Opportunity Tax Credit is a federal tax credit that provides incentives to businesses that hire employees from certain target groups who have faced significant barriers to employment. This includes veterans, individuals with disabilities, and those who have been unemployed for an extended period.
- Solar Tax Credits - up to 30% of solar investment: If your business has installed solar panels or other renewable energy systems, you may be eligible for a tax credit. The federal government offers a solar investment tax credit (ITC) that can be used to offset the cost of installing these systems.
- COVID-19 ERC - up to $26,000 per employee: The Coronavirus Aid, Relief, and Economic Security (CARES) Act created the Employee Retention Credit (ERC) to help businesses that were negatively impacted by the COVID-19 pandemic. The ERC provides a refundable tax credit to businesses that retained employees during the pandemic.
- Disaster ERC - up to $2,400 per employee: The Disaster Employee Retention Credit is similar to the COVID-19 ERC, but it is specifically designed to help businesses that were impacted by natural disasters. If your business was affected by a hurricane, wildfire, or other natural disaster, you may be eligible for this tax credit.
Taking advantage of these tax credits can help your business save money and reinvest those savings back into your business. However, it's important to note that each tax credit has specific eligibility requirements and limitations, so it's best to consult with a tax credit expert such as OnCentive to determine which tax credits your business may qualify for.
Have Questions or Need More Information?
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