Small Business Tax Credit Guide: The Impact of SECURE Act 2.0
Running a small business is no small feat. Between balancing budgets, managing employees, and working toward growth, there’s little time left for navigating the complexities of tax laws. That’s where the SECURE Act 2.0 comes in—a game-changer for small businesses looking to provide retirement plans while optimizing tax benefits.
This guide will walk you through everything you need to know about the SECURE Act 2.0, including how its latest provisions can help your business save on taxes and support employees. By the end, you’ll be equipped with actionable insights and the motivation to maximize these benefits for your business.
What Is the SECURE Act 2.0 (and How Is It Different from the Original SECURE Act)?
The SECURE Act 2.0, signed into law in December 2022, builds upon the foundation of the original "Setting Every Community Up for Retirement Enhancement" (SECURE) Act, enacted in 2019. While both aim to improve access to employer-sponsored retirement plans, SECURE Act 2.0 brings a host of new incentives that make it more affordable for small businesses to offer these plans.
Key Updates in SECURE Act 2.0:
- Start-Up Cost Credit Expansion: Employers with 50 or fewer employees can now claim a tax credit covering 100% of qualified start-up costs, up to $5,000 annually, doubling the original credit of 50%.
- New Employer Contribution Credit: Businesses may claim up to $1,000 per employee annually for matching or profit-sharing contributions for their retirement plans.
- Additional Incentives for automatic enrollment and participation features.
If you’ve been hesitant to roll out a retirement plan due to costs and administrative burdens, these provisions are designed to eliminate those barriers.
Contributions vs. Cost Credits—What They Mean for Your Business
Under SECURE Act 2.0, small businesses can now take advantage of two types of tax credits when establishing a retirement plan:
1. Start-Up Cost Credit
This credit helps cover administrative costs for businesses with up to 100 employees during the first three years of their retirement plan roll-out:
- 50 Employees or Fewer get 100% of eligible costs refunded (up to $5,000/year).
- 51–100 Employees get 50% of costs covered, still capped at $5,000/year.
- Businesses must have at least one Non-Highly Compensated Employee (NHCE)—an employee earning less than $135,000 annually in 2022.
2. Employer Contribution Credit
This credit rewards employers for matching employee contributions or offering profit-sharing:
- Businesses can earn up to $1,000 per employee annually for five years.
- The credit starts at 100% for the first two years and phases down gradually (75% in year three, 50% in year four, and 25% in year five).
- The credit decreases by 2% for every employee over 50 earning less than $100,000.
Key Takeaways for Small Business Owners
- Generous Tax Credits: New provisions cover up to 100% of start-up costs and match contributions for the first five years, potentially saving businesses thousands of dollars.
- Automatic Enrollment Benefits: Adding or including this feature in plans delivers an additional $500/year credit for three years.
- Greater Accessibility: Businesses with 50 or fewer employees reap the most benefits, while those with up to 100 can still achieve significant savings.
By simplifying retirement plan implementation and financially incentivizing small businesses, the SECURE Act 2.0 is paving the way for your business to offer competitive benefits while boosting tax savings.
Take Charge of Your Financial Future
The SECURE Act 2.0 is your opportunity to strengthen your business's foundation while helping your employees prepare for a secure retirement. Why wait? Calculate your potential tax credits and see how much you can save today.
Get Started with Our Tax Credit Calculator or chat with a financial advisor to learn more about designing a compliant retirement plan that works for your business.
Empower your business. Empower your team. With SECURE Act 2.0, the stakes have never been lower, and the rewards have never been greater.
Meet
Brian Boswell
Hi there! 👋🏼 I'm Brian, I specialize in investment management and custom tailored financial planning for physicians. Drawing on my firsthand understanding of the challenges faced by physicians, I offer guidance on protecting your assets, minimizing taxes, and preparing for the future.
Brandon Barber is an investment adviser representative with Savvy Advisors, Inc. (“Savvy Advisors”). Savvy Advisors is an SEC registered investment advisor. The views and opinions expressed herein are those of the speakers and authors and do not necessarily reflect the views or positions of Savvy Advisors. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy.
Savvy Wealth Inc. is a technology company. Savvy Advisors, Inc. is an SEC registered investment advisor. For purposes of this article, Savvy Wealth and Savvy Advisors together are referred to as “Savvy”. All advisory services are offered through Savvy Advisors, while technology is offered through Savvy Wealth. The views and opinions expressed herein are those of the speakers and authors and do not necessarily reflect the views or positions of Savvy Advisors
Small Business Tax Credit Guide: The Impact of SECURE Act 2.0
Running a small business is no small feat. Between balancing budgets, managing employees, and working toward growth, there’s little time left for navigating the complexities of tax laws. That’s where the SECURE Act 2.0 comes in—a game-changer for small businesses looking to provide retirement plans while optimizing tax benefits.
This guide will walk you through everything you need to know about the SECURE Act 2.0, including how its latest provisions can help your business save on taxes and support employees. By the end, you’ll be equipped with actionable insights and the motivation to maximize these benefits for your business.
What Is the SECURE Act 2.0 (and How Is It Different from the Original SECURE Act)?
The SECURE Act 2.0, signed into law in December 2022, builds upon the foundation of the original "Setting Every Community Up for Retirement Enhancement" (SECURE) Act, enacted in 2019. While both aim to improve access to employer-sponsored retirement plans, SECURE Act 2.0 brings a host of new incentives that make it more affordable for small businesses to offer these plans.
Key Updates in SECURE Act 2.0:
- Start-Up Cost Credit Expansion: Employers with 50 or fewer employees can now claim a tax credit covering 100% of qualified start-up costs, up to $5,000 annually, doubling the original credit of 50%.
- New Employer Contribution Credit: Businesses may claim up to $1,000 per employee annually for matching or profit-sharing contributions for their retirement plans.
- Additional Incentives for automatic enrollment and participation features.
If you’ve been hesitant to roll out a retirement plan due to costs and administrative burdens, these provisions are designed to eliminate those barriers.
Contributions vs. Cost Credits—What They Mean for Your Business
Under SECURE Act 2.0, small businesses can now take advantage of two types of tax credits when establishing a retirement plan:
1. Start-Up Cost Credit
This credit helps cover administrative costs for businesses with up to 100 employees during the first three years of their retirement plan roll-out:
- 50 Employees or Fewer get 100% of eligible costs refunded (up to $5,000/year).
- 51–100 Employees get 50% of costs covered, still capped at $5,000/year.
- Businesses must have at least one Non-Highly Compensated Employee (NHCE)—an employee earning less than $135,000 annually in 2022.
2. Employer Contribution Credit
This credit rewards employers for matching employee contributions or offering profit-sharing:
- Businesses can earn up to $1,000 per employee annually for five years.
- The credit starts at 100% for the first two years and phases down gradually (75% in year three, 50% in year four, and 25% in year five).
- The credit decreases by 2% for every employee over 50 earning less than $100,000.
Key Takeaways for Small Business Owners
- Generous Tax Credits: New provisions cover up to 100% of start-up costs and match contributions for the first five years, potentially saving businesses thousands of dollars.
- Automatic Enrollment Benefits: Adding or including this feature in plans delivers an additional $500/year credit for three years.
- Greater Accessibility: Businesses with 50 or fewer employees reap the most benefits, while those with up to 100 can still achieve significant savings.
By simplifying retirement plan implementation and financially incentivizing small businesses, the SECURE Act 2.0 is paving the way for your business to offer competitive benefits while boosting tax savings.
Take Charge of Your Financial Future
The SECURE Act 2.0 is your opportunity to strengthen your business's foundation while helping your employees prepare for a secure retirement. Why wait? Calculate your potential tax credits and see how much you can save today.
Get Started with Our Tax Credit Calculator or chat with a financial advisor to learn more about designing a compliant retirement plan that works for your business.
Empower your business. Empower your team. With SECURE Act 2.0, the stakes have never been lower, and the rewards have never been greater.
Meet
Brian Boswell
Hi there! 👋🏼 I'm Brian, I specialize in investment management and custom tailored financial planning for physicians. Drawing on my firsthand understanding of the challenges faced by physicians, I offer guidance on protecting your assets, minimizing taxes, and preparing for the future.
Brandon Barber is an investment adviser representative with Savvy Advisors, Inc. (“Savvy Advisors”). Savvy Advisors is an SEC registered investment advisor. The views and opinions expressed herein are those of the speakers and authors and do not necessarily reflect the views or positions of Savvy Advisors. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy.
Savvy Wealth Inc. is a technology company. Savvy Advisors, Inc. is an SEC registered investment advisor. For purposes of this article, Savvy Wealth and Savvy Advisors together are referred to as “Savvy”. All advisory services are offered through Savvy Advisors, while technology is offered through Savvy Wealth. The views and opinions expressed herein are those of the speakers and authors and do not necessarily reflect the views or positions of Savvy Advisors
