General Business Credits
About 40 different credits make up the general business credit. However, for small businesses, the general business credit is generally made up the following credits (may vary by year):
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Employer-provided childcare facilities/services credit under Code Sec. 45F
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Alternative motor vehicles credit (business portion) covered by Code Sec. 30B(g)(1)
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Alternative fuel vehicle refueling property credit (business portion) under Code Sec 30C
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New Qualified plug-in electric drive motor vehicles credit (business portion) NQPEDMVs Code Sec 30D
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2-wheeled plug-in electric vehicles credit (business portion, carryforward only) QPEVs under Code Sec 30D
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The energy efficient home credit determined under Code Sec. 45L
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Employer social security credit under Code Sec. 45B(a)
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Indian employment credit under Code Sec. 45A
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Employee retention credit for employers affected by various hurricanes and disasters (carryforward only)
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Employee retention credit, COVID-19-related, under CARES Act Section 2301
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Differential wage payment credit (for compensation paid to active-duty military personnel)
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Small employer pension plan startup cost credit under Code Sec. 45E
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Small employer health insurance premiums credit under Code Sec. 45R
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Small employer automatic enrollment credit (tax years 2020 and later) under code Sec 45T
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Building rehabilitation investment credit under Code Sec. 46
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Business energy investment credit for solar, geothermal, etc., under Code Sec. 46
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Work opportunity credit under Code Sec. 51(a)
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Research Credit Code Sec 41
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Disabled Access Credit Sec 44
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Paid Family and Medical Leave Credit under Sec 45S
Family and Medical Leave Credit (FAMLC)
Added by the TCJA, and extended by the Appropriations Act of 2020, the FAMLC is available to eligible employers for years 2018 through 2025.
Small Employer Automatic Enrolment Credit
Added by the SECURE Act, for years 2020 and later, this is a $500 per year credit for up to three consecutive years! For eligible employers with an automatic contribution feature included in a new qualified retirement plan or an existing plan converted to include an automatic enrollment feature.
Limitation on General Business Credit Based on Tax Liability
The general business credit (except for certain specified credits and the amount attributable to the sum of current year, carry forward and carry back credit amounts) for any tax year is subject to a limitation that is based on the taxpayer's tax liability. The credit must not exceed the excess (if any) of the taxpayer’s “net income tax” (generally, the taxpayer’s regular income tax and alternative minimum tax (AMT), reduced by most non-refundable credits other than the general business credit) over the greater of: (a) the taxpayer’s “tentative minimum tax” for the tax year or (b) 25% of so much of the taxpayer’s “net regular tax liability” as exceeds $25,000 ($12,500 for taxpayers filing married separate).
General Carryback and Carryover Provisions
Unused credits can be carried back 1 year and forward 20 years.