Federal Tax Credits for Small Businesses: Which Ones You Can Claim

Most of the tax credits for small businesses that exist in federal law live in one place: section 38, the general business credit, which lists 41 separate credits and sends all of them through Form 3800. A small company fits perhaps a dozen of them. This guide is that dozen, with the section, the form and who fits each, followed by the three rules that govern every credit on the list: the section 38(c) limit on how much tax a credit can erase, the section 39 carryback and carryforward, and the deduction each credit takes away. Two credits ended in 2025 and are marked as closed. Figures come from the statute on uscode.house.gov, current through September 25, 2026, the Form 3800 instructions (2025) and Rev. Proc. 2025-32.

A credit reduces tax; a deduction reduces the income the tax is figured on. Section 179, bonus depreciation and the startup cost write-off are deductions, and they are in the small business tax deductions guide, not here.

The business tax credit list for 2026

The credits, one paragraph each

Research credit and the payroll election (IRC 41)

The largest credit on the list for a company that builds anything. It rewards spending on work that meets the four-part test, explained in the R&D tax credit guide. A qualified small business, one with gross receipts under $5 million for the year and no gross receipts for any year before the 5-taxable-year period ending with that year, can elect under section 41(h) to apply up to $500,000 of the credit a year against employer payroll tax on Form 941 instead of waiting for income tax, for at most 5 years. The small business R&D guide covers the receipts test; the five-question check on the Payroll Credits page shows whether a company is in.

Small employer health insurance credit (IRC 45R)

Up to 50% of the premiums an employer pays for coverage bought through a SHOP Marketplace, for employers with fewer than 25 full-time equivalents and average wages under $68,200 in 2026 (twice the $34,100 amount in Rev. Proc. 2025-32), for 2 consecutive years. The phase-outs and the Form 8941 math are in the small business health care tax credit guide.

Retirement plan credits (IRC 45E and 45T)

Three credits on one form for employers with no more than 100 employees who earned at least $5,000 the prior year: 50% of the costs of starting a plan (100% at 50 or fewer employees), capped at the greater of $500 or $250 per eligible non-highly compensated employee up to $5,000, for 3 years; up to $1,000 per employee of employer contributions on a declining schedule; and $500 a year for 3 years for automatic enrollment. The SECURE Act tax credits guide works the numbers.

Employer-provided childcare credit (IRC 45F)

Rewritten for amounts paid after December 31, 2025: 40% of qualified childcare expenditures, or 50% for an eligible small business under a 5-year version of the section 448(c) receipts test ($32 million for 2026), plus 10% of resource and referral costs, capped at $500,000 or $600,000. Contracts with a licensed center count, not only an on-site facility. See the employer-provided childcare credit guide.

Paid family and medical leave credit (IRC 45S)

Now permanent. An employer with a written policy giving at least 2 weeks of paid family and medical leave at 50% or more of normal wages earns 12.5% of the leave wages paid to qualifying employees, rising 0.25 point for each point of pay above 50%, to 25% at full pay, or the same percentage of premiums for paid leave insurance. The policy, the employee tests and the 2026 changes are in the paid family and medical leave credit guide.

Disabled access credit (IRC 44)

For a business with prior-year gross receipts of $1 million or less, or no more than 30 full-time employees: 50% of eligible access expenditures above $250 and up to $10,250, so $5,000 at most, on Form 8826 (Rev. September 2017, still current). Eligible spending is what it costs to comply with the Americans with Disabilities Act: removing barriers, interpreters and readers, adapted equipment. Barrier removal in a facility first placed in service after November 5, 1990 does not count.

FICA tip credit (IRC 45B)

The employer Social Security and Medicare tax paid on tips above the amount needed to bring wages up to the federal minimum, for food and beverage businesses and, for tax years beginning after 2024, barbering and hair care, nail care, esthetics and body and spa treatments. The math and Form 8846 are in the FICA tip credit guide.

Fuel tax credit (IRC 34)

The one credit here outside section 38. Section 34 refunds, through Form 4136, the federal excise tax in fuel used off the highway or on a farm: $0.183 a gallon of gasoline and $0.243 a gallon of undyed diesel on the 2025 form. Lawn care companies, contractors and farmers running mowers, generators, excavators and tractors are the usual claimants; see the fuel tax credit guide.

Energy investment credit (IRC 48E)

A credit for solar, storage and other energy property placed in service by a business, claimed on Form 3468 and subject to the wind and solar deadlines in P.L. 119-21. The rates, the wage and apprenticeship bonus and the option to sell the credit are in the investment tax credit guide. The section 179D building write-off that often gets searched alongside it is a deduction, covered in the section 179D guide.

Two credits that closed in 2025

The work opportunity credit under section 51 stops at hires who begin work after December 31, 2025, and the IRS page updated March 20, 2026 says Form 8850 is no longer in use. Wages of employees hired by that date still count for their first year on Form 5884, as the payroll tax credits guide explains. The commercial clean vehicle credit under section 45W allows nothing for a vehicle acquired after September 30, 2025; what "acquired" means, and who can still claim it, is in the commercial clean vehicle credit guide.

Rule 1: the section 38(c) limit

Form 3800 adds the year's credits to carryforwards and carrybacks, then applies section 38(c)(1): the credit cannot exceed net income tax minus the greater of the tentative minimum tax or 25% of net regular tax liability above $25,000. For a corporation, section 38(c)(6)(E) simplifies the second term to 25% of net income tax above $25,000, so a corporation with $100,000 of net income tax can use at most $81,250 of general business credits that year. Section 38(c)(4) lets a group of "specified credits" ignore the tentative minimum tax: among them the FICA tip, health care, paid leave and work opportunity credits, the energy credit, and the research credit of an eligible small business with 3-year average gross receipts of $50 million or less.

Rule 2: carry back 1 year, forward 20

Under section 39(a), the part of the current year's credit the limit blocks is first a carryback to the preceding tax year, then a carryforward to each of the following 20 years. The whole unused amount goes to the earliest of those 21 years first, and the Form 3800 instructions apply credits on a first-in, first-out basis, so the oldest credits are used before this year's. A carryback to a profitable prior year produces a refund claim; a carryforward waits. The fuel tax credit sits outside this rule because section 34 is a refundable credit, and the tax-exempt version of the health care credit is refundable up to the employer's payroll taxes under section 45R(f).

Rule 3: the deduction each credit takes away

Almost every credit on the list denies a deduction for the same dollars, which is the first thing to check when a credit looks too good. Section 280C(a) disallows wages equal to the paid leave credit figured on wages and the work opportunity credit, and premiums equal to the paid leave credit figured on insurance; section 280C(h) disallows premiums equal to the health care credit; section 280C(c) reduces the section 174A research deduction by the research credit unless the reduced credit is elected. Sections 44(d)(7), 45B(c), 45E(e)(2) and 45F(f)(2) each deny a deduction for the amounts behind their credit, and section 45F also reduces the basis of a childcare facility.

Who claims what: owners, LLCs and companies without employees

Searches for LLC tax credits and self employed tax credits usually mean the same list. An LLC taxed as a partnership or S corporation passes each credit to its owners on Schedule K-1, and the owners apply the section 38(c) limit on their own returns, with the added section 41(g) rule that caps the research credit at the tax on that owner's income from the business. A one-person company can claim the research, disabled access, fuel and energy credits, which turn on spending. It cannot claim the six credits that turn on employees, and section 45R goes further by refusing to count owners, 2-percent S corporation shareholders, 5-percent owners and their relatives as employees at all. Founders sorting these by stage should read the tax credits for startups guide; established companies that skipped credits in open years can have the last three checked through Credit Recovery on the Tax Planning page.

State and local programs, such as California's Cal Competes credit, state research credits and enterprise zone credits, are separate from everything above: their own applications, their own agencies, and nothing on Form 3800. The state R&D tax credits guide covers the research credits state by state.

Sources: 26 U.S.C. 38; 26 U.S.C. 39; IRS, Instructions for Form 3800 (2025); IRS, About Form 3800; 26 U.S.C. 41; 26 U.S.C. 45R; IRS, Rev. Proc. 2025-32; 26 U.S.C. 45E; 26 U.S.C. 45T; 26 U.S.C. 45F; 26 U.S.C. 45S; 26 U.S.C. 44; IRS, Form 8826 (Rev. September 2017); 26 U.S.C. 45B; 26 U.S.C. 51; IRS, Form 8850 is no longer in use; 26 U.S.C. 45W; 26 U.S.C. 34; IRS, Form 4136 (2025); 26 U.S.C. 280C. Rules and figures checked against these sources on September 26, 2026. This is general information, not tax advice for your situation. Tax services are provided by licensed tax professionals under a separate engagement agreement. BEG does not provide tax advice.