A Complete Guide to U.S. Tax Credits for Businesses

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Seven federal and state provisions, most of them rewritten by the One Big Beautiful Bill Act, and one of them closed to projects whose construction begins after June 30, 2026. The useful question is not which exist but which you still qualify for on today's date, so each item below carries the rule that switches it on and the one that switches it off.

Start With the Difference Between a Credit and a Deduction

A deduction reduces the income you are taxed on. A credit reduces the tax itself. At the 21% federal corporate rate, $100,000 of deduction saves $21,000 in tax; $100,000 of credit saves $100,000.

Three of the seven items below are deductions: Section 179, bonus depreciation, and the Section 179D energy-efficient buildings deduction. The R&D credit and the Low-Income Housing Tax Credit are the credits.

Credits also carry machinery a deduction does not. Most are nonrefundable and run through the general business credit on Form 3800, where the year’s tax liability caps what you can use. Whatever is left over carries back one year and forward twenty (Instructions for Form 3800), so a loss year defers a credit instead of destroying it.

1. The Section 179 Deduction: Immediate Expensing for Asset-Heavy Businesses

The Section 179 deduction allows businesses to deduct the full cost of qualifying equipment and property in the year of purchase, rather than depreciating it over time. For 2026, the deduction limit is $2.56 million, and it starts shrinking once total qualifying purchases pass $4.09 million (IRS Publication 946). The 2025 figures were $2.5 million and $4 million. Both are indexed for inflation each year.

It suits self-storage, multifamily housing and campgrounds because their capital spending is mostly equipment and qualifying improvements rather than the structure itself, which never qualifies.

For example, a self-storage facility that purchases $1 million in security upgrades and automation software can fully deduct these costs, reducing taxable income immediately.

2. Bonus Depreciation: Back at 100%, and No Longer Expiring

Bonus depreciation allows businesses to write off a large percentage of eligible asset costs in the first year. The rate is 100% for property acquired after January 19, 2025, and that is now permanent. Property acquired before January 20, 2025 stays on the old Tax Cuts and Jobs Act phase-down, which is 40% for assets placed in service during 2025 (IRS Publication 946). The acquisition date decides whether the 100% rate applies. For property acquired before January 20, 2025, the year you put it in service sets the phase-down rate.

Industries such as mobile home parks, hotels, and marinas can use this incentive to rapidly recover costs for large-scale investments like infrastructure improvements. Our write-up on outsourcing for marinas and RV parks covers how these recovery decisions get tracked.

3. R&D Tax Credits: A Major Win for SaaS and Tech Firms

The Research & Development (R&D) Tax Credit provides incentives for companies developing new products, software, or processes. Documentation is the binding constraint on this credit: you need contemporaneous records tying qualified wages and supplies to specific business components, per the IRS research credit guidance.

For a SaaS company the qualifying spend is usually engineering payroll, which is also the largest line on the income statement, so the credit is worth the substantiation effort in a way it is not for a business with a small development team.

Two rules matter more here than the credit rate. Domestic research costs are deductible again in the year they are paid or incurred: OBBBA added §174A for tax years beginning after December 31, 2024, and foreign research stays on 15-year amortization. And a company with under $5 million of gross receipts, with no gross receipts before the five-year period ending with the tax year, can elect to take up to $500,000 of the credit against payroll tax rather than against income tax. Up to $250,000 of it offsets the employer share of social security tax, and the rest offsets the employer share of Medicare tax (Instructions for Form 6765). That election is what makes the credit usable for a pre-revenue SaaS company. It is annual, has to be made on a timely filed return, and is unavailable once you have made it for five preceding years.

4. Energy-Efficient Tax Incentives: Green Savings for Multifamily & Hospitality

The Energy-Efficient Commercial Buildings Deduction (Section 179D) allows property owners to deduct up to $5.94 per square foot for energy-efficient lighting, HVAC, and insulation, for taxable years beginning in 2026. That top rate requires meeting the prevailing wage and apprenticeship rules; without them the range is $0.59 to $1.19 per square foot (Rev. Proc. 2025-32).

Qualifying work covers the building envelope and its major systems:

• Multifamily housing operators can upgrade to smart HVAC systems.
• Hotel owners can install energy-efficient water heating systems.
• Short-term rental hosts usually do not qualify. The building must fall within ASHRAE Standard 90.1, which covers commercial buildings and residential buildings of four or more stories above grade, so a single-family home or low-rise condo is out.

This window has closed. Section 179D(i) ends the deduction for property whose construction began after June 30, 2026, so anything that broke ground on or after July 1, 2026 does not qualify. Projects already under construction before that date still do.

5. Low-Income Housing Tax Credit (LIHTC): Essential for Multifamily Developers

The LIHTC program offers significant tax credits to developers investing in affordable housing. Credits are allocated by state housing finance agencies from an annual per-capita ceiling that the IRS indexes each year, so the amount available and the competition for it both vary by state.

This is particularly relevant for multifamily housing investors and private equity funds seeking long-term tax advantages while contributing to community development. Allocations arrive with compliance obligations that run for fifteen years, which is a bookkeeping commitment as much as a tax one.

6. What the 2025 Tax Law Change Settled

The provisions that were scheduled to sunset at the end of 2025 were addressed by the One Big Beautiful Bill Act, signed July 4, 2025:

• The 20% pass-through deduction (Section 199A) is now permanent. The December 31, 2025 sunset was removed.
• 100% bonus depreciation was made permanent, on the acquisition-date split described in section 2 above.
• Section 179 rose to a $2.5 million deduction limit with a $4 million phase-out threshold for 2025, both indexed for inflation from there.

The planning question shifted from beating a deadline to qualifying for the full amount each year.

7. State Rules, Most of Which Are Not Credits

State rules help in different ways, and most of them work through something other than a credit:

• Florida & Texas: Neither taxes personal income, which helps owners of pass-through entities. Both still tax the business itself: Florida charges corporations 5.5% (Florida Department of Revenue), and Texas charges a franchise tax on revenue above $2.65 million for 2026 and 2027 (Texas Comptroller).
• California: Installing a qualifying active solar energy system does not raise the property assessment, under the new construction exclusion in Revenue and Taxation Code §73. This is property tax relief rather than an income tax credit, and it reaches only systems in process or completed before January 1, 2027 (California BOE, Letter to Assessors 2024/031). Once granted, it survives until the property changes hands.
• Wyoming: No individual or corporate income tax at all (State of Wyoming). The state’s blockchain reputation rests on its entity and banking statutes, which are not tax provisions, so a crypto business gets the same tax treatment here as any other Wyoming business.

Across all seven, the work is less about finding an incentive than about proving you met its conditions in the year you claimed it, and knowing which dates have already passed.

Two Worth Checking Before Year End

Section 179D turns entirely on when your project started, so the record that fixes that date is the thing to locate now rather than at filing. And the R&D payroll election has to sit on a timely filed return, which makes it the one item here that a pre-revenue company can lose purely by filing late.

Working out which of the seven you qualify for, and on which dates, is what our tax solutions work covers. Book time with the tax team if you want that done against your own filings.