Taxes

Minimize your tax liability: 4 small business tax credits you can claim for 2022

  • 5 min Read
  • March 2, 2023

Author

Escalon

Table of Contents

A small business tax credit is a type of incentive offered by the government that’s designed to encourage businesses to invest in certain activities, like innovating their products, entering new markets, caring for their employees, or protecting the environment. 

Unlike a deduction, which reduces your taxes owed, a tax credit is money credited back to your account, after all other calculations and deductions have been completed. That makes these incentives and opportunities even more valuable for business owners. 

Schedule a call today

If you’re not aware of the 2022 tax credits available, you may be missing out!


Unfortunately, many businesses don’t take advantage of all the available tax credits because they either don’t know about them or don’t understand how to qualify for them. Businesses that operate without a dedicated tax professional or knowledgeable Certified Public Accountant are especially likely to leave these valuable credits on the table. 

But knowledge isn’t the only barrier to maximizing your tax credits. The process of claiming a tax credit can be complicated and time-consuming, which can lead to businesses not taking the time to apply for them. Each credit requires a special form, additional information, and particular documentation. Unless you plan ahead, it’s difficult to take advantage of tax credits retroactively.

Can your small business qualify for these four 2022 tax-year credits?

1. The investment credit


The investment credit for businesses is a tax credit available to companies that invest in certain energy-efficient or eco-friendly activities, such as forest rehabilitation, clean energy production, and qualifying advanced coal, gas, and energy projects.

This credit allows businesses to deduct up to 10% of the cost of certain investments from their total taxable income, as long as these investments were made with the intention of increasing energy efficiency and productivity. The credit is available on a sliding scale depending on the type of investment. Additionally, businesses may be able to apply for this credit multiple times over the course of a year.

2. Small employer pension plan credit


The credit for small employer pension plan startup costs is a tax credit designed to encourage small businesses to offer retirement plans to their employees. This credit allows businesses with less than 100 employees to get a tax credit of up to 50% of the costs associated with setting up and administering a qualified retirement plan, including employee education expenses. 

Talk to us about how Escalon’s FinOps can help you stay on top of your 2022 taxes.


This valuable credit can be claimed for up to three years, and can be worth as much as $500 per year for each eligible employee. And it’s a significant benefit to small businesses that need help covering the costs associated with offering a pension plan. This tax credit both reduces your small business expenses and empowers your business to attract and retain better quality talent. 

3. The Work Opportunity Tax Credit


The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to businesses who hire new employees from certain target groups, such as veterans, family assistance recipients, ex-felons, and others. 

The credit is available for up to 40% of the first year’s wages of the employee, up to a maximum of $6,000. This credit helps offset the cost of hiring and training new employees, and incentivizes businesses to hire individuals from these target groups. This provides an opportunity for those who may otherwise have difficulty finding employment, while also benefiting the small businesses that make an effort to provide a healthy work environment to these target groups.

4. The small employer health insurance premiums credit


The credit for small employer health insurance premiums is a tax credit available to small businesses with less than 25 full-time equivalent employees. The credit covers up to 50% of the premiums paid by the employer for health insurance coverage for its employees. 

To qualify, the business must have average wages of no more than $56,000 per employee and must contribute at least 50% of the total premium cost for its employees. The credit is available on a sliding scale depending on how much the employer contributes. 

This health-conscious tax credit is a great benefit for small businesses because it helps offset some of the rising costs associated with providing quality health insurance to the employees. For micro-businesses (those with under 10 employees), who have a particularly difficult time affording healthcare, it’s a benefit that makes attracting and caring for top talent attainable. 

Additionally, this tax credit helps expand healthcare access to a wider range of individuals, ensuring that workers at both large corporations and small neighborhood businesses get the affordable insurance they need to stay healthy. 

Key takeaway


There are dozens of tax credits available to small businesses every year — if you know where to look. These credits can offset the costs associated with attracting and retaining employees, innovating, and expanding green energy. And they can boost your business’ bottom line without adding extra work to your plate or products on your shelves. 

Before you file your 2022 taxes, take the time to explore and apply for these credits. You could save your small business a significant amount of money each year!

Want more? In addition to taxes, accounting, bookkeeping and CFO services through its FinOps, Escalon’s Essential Business Services include PeopleOps (HR, benefits, recruiting and payroll) and Risk (business insurance). Talk to an expert today.


This material has been prepared for informational purposes only. Escalon and its affiliates are not providing tax, legal or accounting advice in this article. If you would like to engage with Escalon, please contact us here.

Schedule a call today

Talk to our team today to learn how Escalon can help take your company to the next level.

  • Expertise you can trust

    Our team is made up of seasoned professionals who bring years of industry experience to the table. You gain a trusted advisor who understands your business inside out.

  • Quality and consistency

    Say goodbye to the hassles of hiring, training and managing in-house finance teams. You will never have to worry about unexpected leave of absence or retraining new employees.

  • Scalability and Flexibility

    Whether you’re a small business or a global powerhouse, our solutions scale with your needs. We eliminate inefficiencies, reduce costs and help you focus on growing your business.

Contact Us Today!

Tap into the latest insights from experts in your industry

Accounting & Finance

M&A Readiness: How to Prepare Your Financials for a Successful Acquisition or Sale 

Mergers and acquisitions (M&A) can dramatically alter a company’s trajectory—unlocking new markets, technologies, or customer bases. Yet, many deals stumble...

Read More
Accounting & Finance

Optimizing Working Capital: Strategies to Maximize Liquidity Without Raising Funds 

Working capital: The difference between your current assets and your current liabilities. It’s a key barometer of financial health.  While...

Read More
Accounting & Finance

Outsourcing vs. In-House: A Strategic Guide for Growing Companies

Expanding your team and capabilities is critical to sustaining growth—but the question often arises: Should you build an in-house department...

Read More
Accounting & Finance

The CFO’s Role in Driving Operational Efficiency in a Mid-Sized Company 

A Chief Financial Officer (CFO) isn’t just a numbers person anymore. Modern CFOs play a pivotal role in shaping strategy,...

Read More
Technology & Security

What Every $10M+ Business Should Know About Data Privacy Laws 

Once your annual revenue surpasses $10 million, you attract more attention from regulators, partners, and customers, especially regarding data privacy....

Read More
People Management & HR

The Cost of a Bad Hire: How to Improve Your Recruiting Process

Hiring is one of the most pivotal processes in any organization, particularly for a medium-sized business looking to scale. Yet...

Read More
People Management & HR

Key Insights from the 2025 CBIZ Not-for-Profit Pulse Survey 

At Escalon, we are committed to keeping our clients informed about the latest trends, challenges, and opportunities across the industries...

Read More
People Management & HR

Scaling Culture: How to Keep Employees Engaged as Your Business Grows

Growth in headcount brings exciting opportunities for a business, but it also poses a key challenge: How do you maintain...

Read More
Accounting & Finance

Managing Multi-State Compliance as Your Workforce Becomes More Distributed

Rapid expansion and remote work trends have empowered medium-sized businesses to hire talent nationwide. Yet with multi-state operations come multi-layered...

Read More