Small businesses with 10 or fewer workers would get doubled retirement plan tax credits

What does this do?

HR 8837, the RISE Act, increases the retirement plan startup tax credit from 50% to 100% of costs, raising the annual cap from $500 to $2,500 for businesses with 10 or fewer employees. The bill also lets retirement plan service providers claim the credit directly, provided they reduce their fees to the small business by at least the amount of the credit received. The small business owner must sign a written agreement confirming they will not claim the same credit. Changes take effect starting with the 2027 tax year.

Who does it affect?

The bill primarily affects businesses with 10 or fewer employees and the workers at those businesses who may gain access to retirement savings plans. Financial service companies and benefits administrators that set up and manage retirement plans are also directly affected.

Why does it matter?

The current 50% credit up to $500 per year has left a financial barrier that the bill identifies as a reason very small businesses do not offer retirement plans. Allowing service providers to claim the credit and pass savings forward as reduced fees shifts when and how small businesses receive financial relief.

What does it cost, and who pays?

• Current credit cap: $500/yr
• New credit cap: $2,500/yr
• Fee cut must match credit amount