What Is the General Business Credit?
Let me explain the general business credit, or GBC, directly to you. It's the total value of all the individual tax credits your business claims in a single tax year. This includes any carryforward credits from previous years plus the credits you've earned this year. Remember, this is a credit, not a deduction—it subtracts straight from your tax bill.
How to Claim It
If you're claiming multiple business tax credits on your return, you need to attach Form 3800, the General Business Credit form, along with the specific IRS forms for each individual credit. That's the straightforward way to handle it.
Key Takeaways
Here's what you need to know: the general business credit totals all the tax credits your business claims for the year. When you're dealing with more than one, report the total on Form 3800. It can include many types, such as the investment credit, low-income housing credit, and the credit for small employer health insurance premiums.
Types of Tax Credits
The general business tax credit isn't one standalone credit—it's a bundle of credits that encourage different business activities, like research, oil recovery, reforestation, or starting a pension plan. You claim each one on its own tax form, then combine them on Form 3800 to figure out your overall allowable credit.
As of 2024, common credits businesses like yours might claim include the work opportunity credit on Form 5884, the credit for small employer health insurance premiums on Form 8941, the employer credit for paid family and medical leave on Form 8994, the low-income housing tax credit on Form 8586, the disabled access credit on Form 8826, the credit for employer-provided child care facilities and services on Form 8882, the credit for small employer pension plan startup costs on Form 8881, and the credit for employer Social Security and Medicare taxes paid on certain employee tips on Form 8846.
Tip for Claiming Multiple Credits
To claim multiple business tax credits, fill out the right IRS form for each one, then carry the total over to Form 3800, the General Business Credit form. That's the process you follow.
Accounting Rules
The general business tax credit is nonrefundable, so it reduces your tax bill directly but only down to zero—any leftover amount is lost. If you can't use part or all of it because of your tax liability limit, you can usually carry the unused credit back one year, though some credits like those for oil and gas production have different rules.
We treat general business credits on a first-in, first-out basis. So, in any tax year, you use them in this order: carryforwards to that year starting with the earliest ones, then the general business credit earned in that year, and finally any carryback to that year.
Warning on Expiration
Some tax credits come with expiration dates, so check the instructions for each one to ensure it's still available for your tax year.
Income Limitations for General Business Credits
Yes, there are limits. Add your net income tax and alternative minimum tax, then subtract the greater of your tentative minimum tax for the year or 25% of your regular tax liability over $25,000—that's $12,500 for married taxpayers filing separately, but only if both qualify. If one spouse has no current or unused credit, the other can use the full $25,000.
Which Tax Credits Are Included
You can find a complete list on the IRS website, but it includes things like the investment credit, work opportunity credit, low-income housing credit, empowerment zone employment credit, credit for small employer pension plan startup costs, credit for employer-provided childcare facilities and services, energy-efficient home credit, alternative motor vehicle credit, credit for small employer health insurance premiums, and the employer credit for paid family and medical leave.
Which Businesses Are Eligible
According to the IRS, eligible small businesses are non-publicly traded corporations, partnerships, or sole proprietorships. Your average annual gross receipts for the prior three tax years can't exceed $50 million. If your business is newer than three years, average the gross receipts for the time it's existed.
The Bottom Line
Form 3800 is where you compile all your tax credit info if you're an eligible business. The general business credit includes carryforward credits from past years plus what you've earned this year— that's the core of it.
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