Discover 5 Tax Credits Every Small Business Owner Can Claim in 2024

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Running a business comes with many financial responsibilities, and paying taxes is a significant one. While it might seem like a hefty expense, with a proper tax strategy, it can also be one of the best ways to save money. Knowing which tax credits your small business can claim could be a game-changer.

A licensed, Certified Public Accountant (CPA) can help you find legal ways to reduce the amount you pay in taxes each year, often through tax credits. Tax credits allow businesses to subtract a certain amount of money from the income taxes they owe.Especially in times of economic uncertainty, tax credits for small businesses are crucial.

Here are five tax credits your small business can claim this year:

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1. Paid Family and Medical Leave Credit

  1. This credit encourages small businesses to offer paid leave for reasons like the birth of a child or a family health emergency. Business owners must have a written policy that meets IRS requirements. They can then claim a credit based on the percentage of wages paid to employees on leave. The credit amount is calculated according to IRS guidelines on Form 8994.
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2. Alternative Fuel and Motor Vehicle Credits

  1. Businesses involved in the production or use of alternative fuels can claim this credit. It supports the shift from imported oil to other fuels. If your business qualifies, you can claim refunds for alcohol, biodiesel, renewable diesel, or alternative fuels. Additionally, businesses can claim up to $8,000 for purchasing alternative fuel vehicles, excluding electric and hybrid ones.
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3. Disabled Access Credit

  1. Making your business accessible to individuals with disabilities can be costly, but it brings benefits. Small businesses with fewer than 30 employees or less than $1 million in annual revenue can claim up to 50% of the costs for disabled access. This incentive not only helps accommodate a wider range of customers but also enhances company culture and reputation.
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4. Empowerment Zone and Renewal Community Employment Credit

  1. If you hire employees living in low-income areas, you could be eligible for this credit. It encourages businesses to hire from empowerment zones, offering a credit of up to 20% of the first $15,000 in wages paid to qualifying employees. This credit aims to diversify staff and support community development.
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5. New Markets Credit

  1. This credit rewards businesses for investing in community development enterprises (CDEs) and community development financial institutions (CDFIs). If your business invests in organizations that support low-income communities, you can claim tax credits. Projects must be in areas with a 20% poverty rate to qualify. Use Form 8874 to apply and ensure you benefit as much as possible.

These tax credits can significantly boost your business’s savings. Review your possible tax credits annually, as your eligibility might change. A CPA can help you prepare and implement a tax strategy to maximize your tax credits and save your business as much money as possible.

Curious about how these tax credits can benefit your business? Call us today and let’s chat about crafting a tax strategy that fits your unique needs.

Insogna CPA