SECURE 2.0 created three federal tax credits for small employers starting a retirement plan. See what you qualify for — in under 60 seconds.
$5,000
Startup Credit / Year
$500
Auto-Enroll / Year
$1,000
Per Employee / Year
📋 Plan & Employer Information
Prior-year employees who earned ≥ $5,000
Non-highly-compensated employees eligible to participate
Employees with compensation less than $100,000
Total annual employer contributions for sub-$100K employees
Qualified costs to set up and administer the plan
Calendar year the plan becomes effective
Plan includes auto-enrollment (EACA / QACA)
Required for new plans effective 2025+. Adds $500/year credit for 3 years.
Calculating your 5-year credit schedule...
📖Credit(k) Help Center
SECURE 2.0 Tax Credits — Simplified
Estimate all three federal small-employer retirement plan tax credits in under 60 seconds. Powered by IRS Form 8881 (Rev. Dec 2025).
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Enter plan info
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API calculates
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5-year schedule
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Step-by-step
Three Credits, One Calculator
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Startup / Admin Credit
Up to $5,000/year for 3 years. Covers plan setup, administration, and employee education costs. IRC §45E.
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Auto-Enrollment Credit
$500/year for 3 years when the plan includes an eligible automatic contribution arrangement. IRC §45T.
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Contribution Credit
Up to $1,000 per employee for 5 years, based on employer contributions for employees earning under $100K. IRC §45E.
Getting Started
1
Enter Employee Counts
Total Employees: Prior-year count of employees who earned ≥ $5,000. This determines eligibility (must be ≤ 100) and the phase-out calculation. Non-HCE Eligible: Non-highly-compensated employees eligible to participate in the plan. Used for the startup credit cap. Under $100K: Employees with compensation below $100,000. These are the employees whose contributions qualify for the contribution credit.
2
Enter Dollar Amounts
Employer Contributions: Total annual employer contributions for employees earning under $100K. Do NOT include employee elective deferrals — only employer match, profit-sharing, or nonelective contributions. Startup Costs: Ordinary and necessary expenses to establish the plan, administer it, and educate employees.
3
Set Plan Details
First Plan Year: The calendar year the plan becomes effective. Credits start this year. Auto-Enrollment: Toggle on if the plan includes an EACA or QACA. Required for new plans after Dec 29, 2022 (effective 2025). Adds a $500/year credit.
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Review Results
Click Calculate Tax Credits to see your full 5-year schedule. Click any year card to see the step-by-step breakdown showing exactly how each credit was calculated, including any phase-out reductions.
Tip: If your headcount or contributions will change year-over-year, the API supports per-year overrides. A future version of this calculator will add year-by-year input rows.
IRS Form 8881 — Simplified Filing Guide
Form 8881 has three parts. Here's what each part does, what you need, and how the numbers flow — without the wall-of-text IRS instructions.
When to file: Form 8881 is filed with your tax return. The credits flow to Form 3800 (General Business Credit). You may elect to start claiming in the year before the plan becomes effective.
Part I — Startup Costs + Contribution Credit (§45E)
Line
What to Enter
Notes
Line A
Employee count from prior year
Those with ≥ $5K comp. Must be ≤ 100.
Line 1
Qualified startup costs
Setup, admin, employee education expenses
Line 2
50% or 100% of Line 1
100% if ≤ 50 employees; 50% if 51–100
Line 3
Credit cap amount
Greater of $500 or min($250 × NHCEs, $5,000)
Line 4
Smaller of Line 2 or Line 3
This is your startup credit
Line 6a
Employee count (prior year)
Same count — for contribution credit section
Line 6b
Employer contributions
Exclude employee deferrals & DB plan contributions
Line 6c
Per-employee amounts (≤ $1K each)
Only for employees with wages < $100K
Line 6e
Phase-out reduction
If > 50 employees: reduce by 2% per employee over 50
Line 6f–6g
Final contribution credit
Applicable % × contributions (capped at $1K/employee)
Applicable Percentage Schedule (Line 6e):
Year 1: 100% · Year 2: 100% · Year 3: 75% · Year 4: 50% · Year 5: 25%
Reduced by 2 percentage points per employee over 50 (using total employee count, not just those under $100K).
Part II — Auto-Enrollment Credit (§45T)
Line
What to Enter
Notes
Line 9
$500
If plan includes EACA. $0 if not.
Line 10
Pass-through credits
From S-corps or partnerships (if applicable)
Line 11
Total auto-enrollment credit
Line 9 + Line 10. Reports to Form 3800, Part III, Line 1dd.
New plan mandate: Plans established after Dec 29, 2022 must include auto-enrollment by 2025. All new plans qualifying for startup credits also qualify for this additional $500/year credit.
Part III — Military Spouse Credit (§45AA)
Available for employers with ≤ 100 employees who maintain a defined contribution plan with specific features benefiting military spouses. Up to $300 per eligible military spouse employee. Not currently calculated by Credit(k) — coming in a future release.
How Credits Flow to Your Tax Return
1
Complete Form 8881
Calculate each credit in Parts I, II, and III as described above.
2
Transfer to Form 3800
Startup/contribution credit → Line 4a. Auto-enrollment → Line 1dd. Military spouse → Line 1ee.
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Reduce Your Tax
Credits reduce your tax liability dollar-for-dollar as part of the General Business Credit. These are non-refundable — they cannot exceed your tax liability.
Important: You cannot deduct expenses for which you claim a credit. Reduce your startup cost deduction by the credit amount claimed.
Tax Credit Glossary
Eligible Employer
An employer with no more than 100 employees who received at least $5,000 in compensation during the preceding year, and who did not maintain a substantially similar plan in the prior 3 tax years.
Qualified Startup Costs
Ordinary and necessary expenses to establish or administer an eligible retirement plan, plus retirement-related employee education costs. IRC §45E(d)(2).
NHCE
Non-Highly Compensated Employee. Any employee who is not an HCE. Used to determine the startup credit cap ($250 per eligible NHCE).
HCE
Highly Compensated Employee. For 2025: an employee who earned more than $160,000 in the prior year (or is a >5% owner). HCEs are excluded from the NHCE count.
EACA
Eligible Automatic Contribution Arrangement. A plan feature that automatically enrolls employees at a default deferral rate with specific notice requirements. Qualifies for the $500/year credit under §45T.
QACA
Qualified Automatic Contribution Arrangement. A type of safe harbor plan with auto-enrollment that satisfies ADP/ACP testing. Also qualifies for the EACA credit.
Applicable Percentage
The percentage applied to employer contributions for the contribution credit. Starts at 100% (years 1–2), phases down to 25% (year 5), and is further reduced by 2% per employee over 50.
Phase-Out
For employers with 51–100 employees, the applicable percentage is reduced by 2 percentage points for each employee in excess of 50. Based on total employees (≥$5K comp), not just those under $100K.
First Credit Year
The tax year the eligible plan becomes effective. Employers may elect to treat the preceding tax year as the first credit year for startup costs.
General Business Credit
Form 3800. The umbrella credit that includes the §45E startup/contribution credits and §45T auto-enrollment credit. Non-refundable — cannot exceed your tax liability.
Elective Deferrals
Employee salary reduction contributions (pre-tax or Roth). These do NOT count as qualifying employer contributions for the contribution credit.
Controlled Group
Related employers treated as a single employer for credit eligibility. All employees across the group count toward the 100-employee threshold. IRC §45E(c).
Frequently Asked Questions
No. You must reduce your otherwise allowable deduction for startup costs by the credit amount claimed on Form 8881. You claim the credit OR the deduction for the same dollars — not both. Most employers find the credit more valuable since it's a dollar-for-dollar tax reduction.
You are not eligible for any of the three credits. The 100-employee threshold applies to employees who received at least $5,000 in compensation in the preceding year. There is a 2-year grace period if you grow beyond 100 after initially qualifying.
No. Only employer contributions qualify — matching contributions, profit-sharing, and nonelective contributions. Elective deferrals (both pre-tax and Roth) made by employees are explicitly excluded from the contribution credit calculation.
Generally no. You cannot claim the startup credit if you maintained a qualified plan covering substantially the same employees during the prior 3 tax years. However, you may still qualify for the auto-enrollment credit ($500/year) if you're adding an EACA feature to an existing plan.
The applicable percentage for the contribution credit is reduced by 2 percentage points for each employee over 50. For example, with 75 employees (25 over 50), the reduction is 50 percentage points — so Year 1 drops from 100% to 50%, and Year 5 drops to 0%. This uses total employee count (≥$5K comp), not just those under $100K.
No. These are non-refundable credits that are part of the General Business Credit (Form 3800). They can reduce your tax liability to zero but cannot generate a refund. Unused credits may be carried back 1 year or forward up to 20 years.
Yes, for plans established after December 29, 2022, effective with plan years beginning in 2025. Employers with 10 or fewer employees are exempt. Since it's mandatory, all qualifying new plans automatically get the $500/year EACA credit for 3 years.
SECURE 2.0 added a military spouse participation credit under §45AA (Form 8881 Part III). It provides up to $300 per military spouse employee for employers with ≤ 100 employees. This credit is not yet calculated by Credit(k) but will be added in a future release.
What's New
v1.0April 2026
✅Launch: Credit(k) goes live with all three SECURE 2.0 credits — Startup, Auto-Enrollment, and Employer Contributions.
✅Cloudflare Worker API: Shared calculation engine deployed as a Worker. Any (k) Suite app can call the same API.
✅Phase-out correction: Uses total employee count (≥$5K comp) for the 2%-per-employee phase-out, correcting errors found in several third-party calculators.
✅Step-by-step breakdown: Click any year card to see exactly how each credit was calculated — full audit trail.
✅Form 8881 Guide: Built-in filing guide with line-by-line instructions adapted from the Dec 2025 IRS revision.
RoadmapComing Soon
🔜Per-year input rows: Override headcount and contributions for each of the 5 plan years individually.
🔜Military spouse credit: Part III of Form 8881 (§45AA) calculation support.
🔜PDF export: Download a branded Credit(k) summary report for clients.
🔜Advisor → CPA kit: AI-generated summary documents to share with the client's tax preparer.