Leveraging Tax Credits for Small Business Retirement Plans in 2025
Launching or improving a retirement plan can feel like a big investment for small businesses. But what if you could significantly reduce your costs thanks to powerful tax credits available under the SECURE 2.0 Act?
Good news: You can.
The SECURE 2.0 Act introduced expanded tax credits to help small businesses start or enhance a 401(k) or similar retirement plan. If you have not taken advantage of these benefits yet, 2025 may be your best opportunity.
At Maxus Plan Solutions, we specialize in helping small business owners design and administer cost-effective retirement plans that are compliant and built for long-term success. This article outlines the key tax credits available in 2025 and how your business can benefit.
Why the SECURE 2.0 Act Matters
The Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act, passed in 2022, expanded financial incentives to encourage more small businesses to offer retirement benefits.
One of the most impactful features of the legislation is its enhanced tax incentives. For businesses with 50 or fewer employees, these credits may cover up to 100% of your plan startup cost, plus provide additional credits for contributions and plan features like automatic enrollment.
Key Tax Credits for 2025
Here is a breakdown of the major tax credits your business may qualify for:
Startup Cost Tax Credit
- For businesses with 50 or fewer employees, the credit covers 100% of eligible startup costs, up to $5,000 per year for the first three years.
- Businesses with 51–100 employees can still receive 50% of startup costs, still capped at $5,000 annually.
- Eligible expenses include:
- Plan setup and administration fees
- Employee education materials provided by your financial advisor or recordkeeper
- Consulting and compliance services related to plan launch
Employer Contribution Tax Credit
To encourage generosity, SECURE 2.0 also provides a credit for employer contributions:
- Up to $1,000 per employee for those earning less than $100,000 annually
- 100% of contributions can be claimed in the first year
- The credit pashes out over five years
This is especially helpful for employers using Safe Harbor or matching contributions to comply with nondiscrimination testing rules.
Auto-Enrollment Tax Credit
Employers who include auto enrollment in their new plan receive an additional $500 tax credit per year, for up to three years.
How to Qualify and Maximize Your Savings
To take full advantage of these credits, your business must:
- Have 100 or fewer employees who received at least $5,000 in compensation the prior year.
- Offer a new qualified plan, or join a new Pooled Employer Plan
- File IRS Form 8881 or other applicable forms to claim the credits
Important: Work with your accountant or tax advisor to ensure accurate filing. While Maxus Plan Solutions does not provide tax preparation services, we design plans that align with IRS requirements to support your ability to claim these credits.
Practical Example
A 30-employee marketing agency decides to launch a 401(k) plan in 2025. Here’s what their potential first-year tax savings could look like:
- Startup Credit: $5,000 per year × 1 year = $5,000
- Employer Contribution Credit: $1,000 × 25 eligible employees = $25,000
- Auto-Enrollment Credit: $500 per year × 1 year = $500
Total potential value in year one: $30,500
That’s a massive savings for a small business, and it doesn’t even include the long-term value of increased employee retention and tax deductions from contributions.
How Maxus Plan Solutions Helps
While we do not offer investment or tax advice, Maxus Plan Solutions plays a critical role in helping small businesses navigate and benefit from SECURE 2.0:
- Custom Plan Design: We create retirement plans tailored to your business goals and credit eligibility
- Administrative Support: We manage day-to-day operations so you can focus on growing your business
- Compliance Expertise: We ensure your plan remains aligned with IRS and Department of Labor regulations
- Collaboration: We work closely with your financial advisor and CPA to help you maximize your benefits
Don’t Leave Money on the Table
Small business owners often assume that retirement plans are too expensive or complicated to offer. With the right support and strategy, you can offer powerful benefits at a surprisingly low cost.
Whether you’re starting from scratch or upgrading an old plan, Maxus Plan Solutions can help you build a compliant, efficient, and valuable retirement solution.
Let’s make 2025 the year you invest in your people and get rewarded for it.