Very small businesses that want to set up a retirement plan for their employees, such as a 401(k), would get a bigger tax credit to help cover the startup costs under this bill. Employers with fewer than 10 employees, called microemployers, could claim a tax credit covering 100 percent of eligible plan startup costs, up from the current 50 percent, up to a maximum credit of $2,500 per year instead of $500. To qualify, the small business's retirement plan must also accept a specific type of employer matching contribution under the tax code. The change would apply to tax years beginning after December 31, 2024, meaning eligible microemployers could claim the larger credit going forward. The goal is to make it more affordable for the smallest employers to offer their workers a retirement savings option.
Congressional Summary
Retirement Investment in Small Employers Act This bill increases the federal tax credit limit for startup costs incurred by certain small businesses to establish a qualified retirement plan.As background, a federal tax credit is allowed for 50% of the costs incurred by a small business with no more than 100 qualified employees (or 100% of such costs for a small business with no more than 50 qualified employees) to establish a qualified retirement plan. Under current law, the tax credit is limited to the greater of (1) $500, or (2) the lesser of $250 per eligible employee or $5,000. (Additional limits may apply.)The bill increases the limit on the tax credit for retirement plan startup costs for employers with no more than 10 employees to the greater of (1) $2,500, or (2) the lesser of $250 per employee or $5,000.For the increased tax credit limit to apply, the retirement plan established by the business must accept payment of the matching contribution under the Saver’s Match program. Under the Saver's Match program, beginning in 2027, individuals that meet certain requirements are eligible to have a federal matching contribution of up to $1,000 (or $2,000 for married joint filers) deposited into a qualified retirement account.
Details
- Congress
- 119th
- Chamber
- Senate
- Status
- summarized
- Action
- Introduced in Senate
- Action Date
- 2025-05-21
- Date Added
- 2026-07-16
- Source
- Congress.gov →
Like reading a bill in plain English?
We're building an app that does this for every bill in Congress and lets you tell your reps how you want them to vote. We're a small team getting ready to launch, and we're trying to show investors that real people want this. Be one of them. Help us get it built. Leave your email and we'll tell you the moment the app is ready.