The new Inflation Reduction Act includes several new and expanded business tax deductions and credits. Are small businesses aware of the new tax breaks? Will they take advantage of them? Intuit QuickBooks commissioned a survey of 1,000 small businesses throughout the US to find out.
Three-quarters of small businesses are aware of new tax breaks
The Inflation Reduction Act became law on August 16, 2022. The new small business tax breaks include:
- Research and development payroll tax credit increased by $250,000 to $500,000.
- New solar-power tax credit covers 30% of the cost of switching to solar power.
- New energy-efficiency tax deduction allows small businesses to deduct up to $1 per square foot of their business for sustainability upgrades.
Our research reveals the majority of small businesses are aware of the changes. Just one in four admitted they hadn’t heard about the new tax breaks yet—as the chart below shows.
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Most small businesses want to use new tax breaks
The most popular tax break included in the Inflation Reduction Act is the energy-efficiency tax deduction, with 57% saying it’s “very likely” they will take advantage of it. The least popular is the solar-power tax credit, with just 48% saying it’s “very likely” they will use it. On average, just one in ten say it’s “not at all likely” they will use each tax break.
Do small businesses typically use other tax breaks?
According to our survey, up to two-thirds of small businesses have used tax breaks before (see chart below). This could be a good indicator of how many will take advantage of the new tax breaks in the Inflation Reduction Act. Given the high levels of awareness and interest, it’s likely similar numbers will do so.
QuickBooks commissioned a survey in August 2022 of 1,000 small business owners aged 18+ throughout the US. Census data weightings were used to ensure the responses are representative as possible. Percentages have been rounded to the nearest decimal place. Responses were collected in an online survey using Pollfish audience pools and partner networks with double opt-ins, random device engagement sampling, and post-stratification to ensure accurate targeting and results. Respondents received remuneration.
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