2010 Small Business Tax Credits Not to Miss

Small business tax credits are available to small business owners as a way to boost net income. The credits are subtracted from your total tax liability and can make a big difference in the financial success of your business. Many of these credits are overlooked and can add up to large sums of money for business owners. These credits were enacted to boost the economy and decrease unemployment for Americans.

New Hire Retention Credit

The New Hire Retention Credit was enacted in March of 2010 to encourage small business owners to hire new employees. If you hired new employees, you may be eligible for this credit. You can claim 6.2% of each new employee’s wages, up to $1000. The employee should have been hired after February 3, 2010 and before January 1, 2011 in order for you to qualify for these tax credits.

Health Care Tax Credits

If you are a small business owner that provides health coverage for your employees, you may be eligible for the health care tax credits. You must truly be a small business with less than 25 full time employees. The average wage must be below $50,000. If you pay at least 50% of their health care costs, you can claim up to 35% of those costs in 2010. This credit is scheduled to increase to 50% by 2014. The health care tax credit has also been expanded to include children under the age of 27. This health coverage is tax free and gives the employee a variety of benefits to choose from.

General Business Tax Credits

One of the small business tax credits that gives relief for business owners is the general business tax credit. The new law allows business owners to carry general business credits five years. It also exempts small businesses from the alternative minimum tax. There a several new tax credits that apply, such as the health insurance premiums, employer provided child care services and more.

Section 179 Extension

The new tax credits provide an extension of section 179 and allow you to expense certain types of property, instead of depreciating it over time. Basically, you can deduct the purchase price and get immediate tax credits. This is great for businesses that find themselves purchasing expensive equipment and technology throughout the year. Also, it is great for a start up business to help ease the cost of the business.


Another change to the small business tax credits involves vehicles that are purchased for your small business. Now, you can add an extra $8,000 of depreciation to vehicles, the total allowance is over $11,000. There is also an increased depreciation credit for first year businesses. You can recover 50% of your costs on qualified property, not including real estate or buildings.

Start Up Credits

If you started a business in 2010, you will be glad to know you can deduct up to $10,000 for start up costs. This is an increase from $5,000 in 2009. Any outstanding costs can be deducted over the next 180 months.

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