There is a quiet tax problem spreading across businesses of every size in America. Unlike most tax problems, this one is not about paying too much. It is about collecting tax credits you are already eligible for.
An estimated $60 billion in tax credits went unclaimed in 2019 alone, and estimates suggest the figure increases every year. Across thousands of federal, state, and local programs, most business owners have never heard of numerous credits. These are not obscure loopholes buried in fine print. Many are straightforward, well-established credits designed to reward businesses for doing what they already do. This can include hiring employees, offering benefits, providing leave, investing in training, and supporting working families.
The reason so many businesses miss them is not complexity, necessarily. It is awareness. Most business owners focus on running their operations. They do not have time to comb through the tax code to find the credits their accountant may or may not know to ask about. And in that gap, between what is available and what gets claimed, a significant amount of money quietly disappears every filing season.
You are reading this article to close that gap.
Why Most Businesses Miss Employee Benefit Tax Credits
The conventional approach to tax preparation, which is gathering your documents, handing them to your accountant, and filing by the deadline, is designed for compliance, not optimization. Most standard tax preparation processes are built around capturing the obvious deductions: payroll, rent, equipment, and travel. Employee benefit tax credits, which require a more proactive and often more specialized approach to identify and claim, frequently fall outside that scope.
There are a few specific reasons this happens consistently:
- Credit eligibility is not self-evident. Unlike a deduction that follows naturally from an expense you have already recorded, many tax credits require separate analysis to determine eligibility. A business might qualify for the Work Opportunity Tax Credit based on who it hired. The Paid Family and Medical Leave credit is based on how it structures its benefits, but neither of these connections is made automatically during a standard filing process.
- The landscape changes frequently. Tax credits are modified, expanded, introduced, and extended on a rolling basis. Keeping up with what is currently available, and under what conditions, requires ongoing attention that most business owners simply do not have bandwidth for. The OBBBA alone introduced and expanded several employee-related credits in 2025. And the result is that many businesses have not yet factored into their tax planning.
- There is a misconception about who qualifies. Many business owners assume that valuable tax credits are reserved for large corporations with dedicated tax departments. In reality, some of the most generous employee benefit credits are specifically structured to favor small and mid-sized businesses. They often have higher credit percentages and lower eligibility thresholds than their larger counterparts.
The Most Valuable Employee Benefit Tax Credits Available Right Now
Here are the credits that deserve the most attention from American business owners heading into this filing season:
The Work Opportunity Tax Credit (WOTC)
One of the most consistently underutilized credits available is WOTC. It rewards employers for hiring individuals from specific target groups: veterans, long-term unemployed workers, recipients of certain federal assistance programs, and others.
The credit can be worth between $1,200 and $9,600 per qualifying employee, depending on the target group and hours worked. For businesses with moderate to high hiring volume, the cumulative value of this credit can be substantial. And yet many employers never connect their hiring activity to their tax return.
The Employer Child-Care Credit
As covered in our earlier article on returning tax deductions, the OBBBA significantly expanded this credit. Large businesses can now claim 40% of qualifying child-care expenses up to $500,000 annually. Small businesses (those with 50 or fewer employees) can claim 50% of qualifying expenses up to $600,000. If your business contributes to employee childcare costs in any form, this credit is worth examining closely.
The Paid Family and Medical Leave Credit
Now permanently extended under the OBBBA, this credit rewards employers who provide paid family and medical leave to qualifying employees. Eligible businesses can claim a credit equal to a percentage of wages paid during leave, ranging from 12.5% to 25% for the most generous leave policies. The OBBBA also reduces the minimum employment eligibility period has from one year to six months. These changes significantly broaden the pool of qualifying employees.
The Small Business Health Care Tax Credit
Designed specifically for small businesses that provide health insurance to their employees, this credit covers up to 50% of premiums paid or 35% for tax-exempt organizations.
To qualify, a business must have fewer than 25 full-time equivalent employees, pay average annual wages below a certain threshold, and cover at least 50% of employee premium costs. Many eligible businesses either do not know this credit exists or assume they do not qualify without ever checking.
The Disabled Access Credit
This credit is for small businesses that make accommodations for employees or customers with disabilities. The Disabled Access Credit covers 50% of eligible access expenditures between $250 and $10,250, up to a maximum credit of $5,000 per year. This includes costs for removing barriers, providing accessible materials, and acquiring adaptive equipment.
How to Claim Them Correctly
Claiming tax credits for employee benefits requires more than adding a line to your return. The general process looks like this:
- Conduct an eligibility assessment first. Before claiming any credit, map your current employee benefit offerings, hiring practices, and qualifying expenditures against the eligibility criteria for each available credit. This is the step most businesses skip, and it is the most important one. The professionals at Expense to Profit conduct exactly this kind of structured assessment, ensuring no qualifying credit goes unexamined before a single form is filed.
- Maintain documentation throughout the year. Credits claimed at filing time must be supported by records created in real time, including hire dates, benefit enrollment records, leave wage calculations, child-care expense receipts, and similar documentation. Reconstructing this information at tax time is difficult and often incomplete.
- Use the correct forms. Each credit has a dedicated IRS form: Form 5884 for WOTC, Form 8994 for the Paid Family and Medical Leave credit, Form 8941 for the Small Business Health Care Tax Credit, and so on. These feed into Form 3800, the General Business Credit form, before it applies to your return. Getting the forms right matters: an otherwise valid claim can be delayed or disallowed through filing errors that a knowledgeable professional would catch before submission.
- Work with a specialist, not just a generalist. Standard tax preparation is not the same as tax credit optimization. The team at Expense to Profit actively tracks the full landscape of available credits, monitors legislative changes that affect eligibility, and knows how to identify qualifying activity within your specific business structure. We consistently surface opportunities that a generalist filing process misses. If your current tax preparation approach is not specifically designed to find these credits, some of them are likely being missed.
Conclusion
Most business owners work hard to control what goes out. Fewer pay enough attention to what they are entitled to bring back in. Employee benefit tax credits sit squarely in that second category. Money that the tax code has already set aside for businesses like yours is waiting to be claimed by whoever shows up with the right information and the right process.
The businesses that consistently capture these credits are not doing anything extraordinary. They are hiring, offering benefits, and supporting their employees: the same things you are likely already doing. The difference is that they have a system in place to translate that activity into a tax outcome.
Expense to Profit helps business owners address these differences. Whether you are starting from scratch or revisiting years of filings that may not have captured everything available, reach out to us today and let us find out exactly what your business has been entitled to all along.
