Lawmakers Revive Startup Tax Credit Bill for Micro-Businesses
A reintroduced bill would extend retirement plan accessibility to micro-businesses and service providers.
Congresswoman Claudia Tenney (R-NY), along with Representatives Brad Schneider (D-IL), Adrian Smith (R-NE), and Linda Sánchez (D-CA) on Thursday reintroduced the Retirement Investment in Small Employers (RISE) Act, a bill that would help businesses with less than 10 employees offer retirement benefits.
While legislation under SECURE 2.0 offers startup tax credits that covers administrative costs for small businesses with less than 50 employees, many micro-businesses end up not utilizing the credit because of its formula.
Employers are also still subject to the administrative tasks associated with offering a retirement plan, including plan setup decisions, compliance requirements, and payroll integration, further dissuading them from providing retirement businesses.
The RISE Act would avoid this by allowing service providers to be charged for the credit, rather than the plan sponsor.
“The RISE Act ensures that micro-businesses can fully access the retirement plan tax credits already available under current law and expands eligibility so more employers can participate,” said Congresswoman Tenney.
“Small businesses employ nearly half of America’s workers, yet many of their employees still lack access to employee sponsored retirement plans. The RISE Act helps break down these barriers by addressing the costs and administrative complexity that often prevent small businesses from offering retirement benefits,” added Congressman Schneider.
The bill has also seen support from the American Retirement Association (ARA). “Small businesses are the backbone of the American economy, yet too many still lack access to the tools and incentives needed to offer retirement plans to their workers. The RISE Act takes a smart, targeted approach to expanding retirement coverage by strengthening the startup tax credit for the smallest employers and reducing the administrative burdens that often stand in the way of offering a plan,” said Brian Graff, CEO of the ARA.
Recent findings show that despite the availability of startup tax credits, small businesses who are implementing retirement plans are not utilizing them. A 2025 working paper from the National Bureau of Economic Research found that only 5.5% of eligible firms claim the credit. Plus, of those who do, most only claim the credit for one year even though they’re eligible for up to three years.
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news.