Yes. The small business start up credit is 50% of eligible start up and administrative costs, for a maximum credit of $500 per year or $1500 over 3 years, plus you can write off the balance of the the cost of the plan as a business deduction.
- Plan cost $2000
- Year 1 tax credit: $500
- Year 1 tax deduction: $1995 @ 40% tax bracket <$800> savings
- Out of pocket first year: $2495 – $500 – $800 = $1195
Savers Tax Credit: You are entitled to a tax credit of up to 50% of your contribution to a retirement plan. This provision was made a permanent part of this tax code as part of the Pension Protection Act of 2006. AGI must be less than 33,000 in 2009 for MFJ to get the full 50% Remember: a tax credit is a dollar for dollar reduction in your tax bill as opposed to a tax deduction. Married couples: get a $2,000 credit for each spouse or $4,000 total credit each year against any income taxes they owe. Saver’s credit is available for IRA, Solo 401k, 401(k), 403b, and 457 plans.