Federal Tax Credits, Changes for Small Businesses

The Internal Revenue Service is reminding small business owners about tax saving opportunities and changes for 2024.

The Inflation Reduction Act, enacted in the summer of 2022, includes provisions to help small businesses save on energy costs. 

Small businesses can receive a tax credit covering 30% of the cost of switching over to low-cost solar power, lowering operating costs, and protecting against volatile energy prices. 

Small business building owners can also receive a tax credit up to $5 per square foot to support energy efficiency improvements that deliver lower utility bills.

For businesses who use trucks and vans and switch to electric and fuel cell models, tax credits are available for up to 30% of purchase costs for models that meet Clean Commercial Vehicle Credit requirements. 

Educational Assistance 

As employers look to set up worthwhile fringe benefits for employees, an increased number of employers are offering educational assistance programs. 

Educational assistance programs have been available for many years.

The option to use them to pay student loans has been available only for payments made after March 27, 2020. 

Educational assistance programs can now be used to pay principal and interest on an employee’s qualified education loans.

Aside from paying for books, supplies, tuition, and other fees, programs can now be used to pay principal and interest on an employee’s qualified education loans.

Payments made directly to the lender and those made to the employee qualify.

The IRS outlines student loan qualifications online.  

2024 Changes 

There are also a number of reporting changes that take effect this year.

Some businesses may receive Forms 1099-K for the first time. 

The threshold for businesses who receive income from third-party settlement organizations is now $600, which is lower than it has been in the past. 

These will be sent in January 2024. 

The threshold for businesses who receive income from third-party settlement organizations is now $600.

There are no changes to what counts as income or how tax is calculated. 

For business taxpayers, most income is taxable, even if it’s not reported to them on a 1099 or another form issued by a third party.

The 1099-K reports various business transactions, including income from a business the taxpayer owns, self-employment, activities in the gig economy, or the sale of personal items and assets.