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Tax planning isn’t just about deducting expenses — it’s also about claiming tax credits, which directly reduce the amount of tax you owe. For small businesses especially, tax credit programs can provide significant savings and free up cash flow for growth.
In this guide, we’ll cover what tax credits are, the most common small business tax credit programs available in 2026, eligibility rules, and how to claim them confidently.
A tax credit is an amount that reduces your tax bill dollar for dollar. This is different from a tax deduction, which only reduces taxable income.
For example:
$1,000 in deductions might save you $250 in tax (depending on your tax rate).
$1,000 in tax credits reduces your tax bill by $1,000 directly.
That’s why credits are often more valuable than deductions — and why every small business should be aware of available credit programs.
Here are some of the most useful tax credits for small business owners in 2026:
Work Opportunity Tax Credit (WOTC)
For hiring individuals from certain target groups (veterans, long-term unemployed, etc.).
Who qualifies: Businesses that hire eligible employees.
Benefit: Tax credit based on wages paid.
Employee Retention Credit (ERC)
Created to encourage businesses to keep employees during downturns.
Who qualifies: Businesses affected by revenue decline or other qualifying conditions.
Benefit: Credit calculated based on qualified wages.
Note: Eligibility rules have changed over time — always check the latest IRS guidance.
Research & Development (R&D) Tax Credit
For businesses that invest in innovation, product development, or process improvement.
Who qualifies: Businesses that conduct qualified research activities.
Benefit: Credit based on qualified research expenses.
Research & Development (R&D) Tax Credit
For businesses that invest in innovation, product development, or process improvement.
Who qualifies: Businesses that conduct qualified research activities.
Benefit: Credit based on qualified research expenses.
Small Employer Health Insurance Credit
For small businesses that provide health insurance to employees.
Who qualifies: Eligible small employers who pay for employee health coverage.
Benefit: Credit based on a percentage of premiums paid.
Depending on your business and location, additional credits may be available:
Energy Efficiency Credits — for energy-saving upgrades
State & Local Tax Credits — varies by state
Apprenticeship or Training Credits
New Markets or Community Investment Credits
Always check with a tax professional or your state’s tax authority for the most up-to-date local incentives.
To claim a credit:
Review eligibility requirements.
Collect proof of qualified activity or expense.
Complete necessary IRS forms on your tax return.
Retain documentation in case of audit.
Documentation is key. For example, to claim R&D credits, you must prove eligible activities and costs — which means paperwork matters as much as the credit itself.
One of the biggest challenges in claiming credits is having organized proof — receipts, invoices, payroll records, and documentation of qualifying activities.
Manage Receipt can help by:
Capturing receipts instantly as you spend
Storing all receipt proof securely
Making it fast to find specific documents
Supporting clear records of eligible expenditures
Keeping documentation ready for tax preparation or audit
Whether you’re claiming a hiring credit or a research credit, organized documentation improves accuracy and reduces risk — and that makes claiming credits easier and more successful.
Click Here to know more about how Manage Receipt helps small businesses.
Click here to calculate your estimated tax.
Small business tax credit programs are powerful tools to reduce your tax burden — and in some cases, they can return cash directly to your business. Whether you’re hiring, investing in innovation, or providing employee benefits, there’s likely a credit that applies to your situation.
Success in claiming credits comes down to being proactive and organized. With consistent record-keeping and proper documentation — supported by tools like Manage Receipt — you can maximize your eligible credits and keep more money working in your business.
Tax credits aren’t just savings.
They’re strategic leverage.
From smartphones to air conditioners, big purchases come with big responsibilities. With Manage Receipt, you can stop worrying about lost receipt. Whether you’re requesting a refund or sending a product for repair, your receipts are always there when you need them.
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