Free employer tool
SECURE 2.0 401(k) Tax Credit Calculator
Small businesses starting a 401(k) can claim up to three separate federal tax credits. Adjust the inputs below to see a five-year estimate instantly — no email address, no sign-up.
Your business
The startup credit applies to employers with 100 or fewer employees.
Non-highly-compensated employees drive the $250-per-head startup credit.
The contribution credit is capped at $1,000 per employee and phases down after year two.
Estimated five-year credits
$52,500
- Startup cost credit (§45E)
- $9,000
- Auto-enrollment credit (§45T)
- $1,500
- Employer contribution credit
- $42,000
Year-by-year
| Year | Startup | Auto | Contrib. | Total |
|---|---|---|---|---|
| 1 | $3,000 | $500 | $12,000 | $15,500 |
| 2 | $3,000 | $500 | $12,000 | $15,500 |
| 3 | $3,000 | $500 | $9,000 | $12,500 |
| 4 | $0 | $0 | $6,000 | $6,000 |
| 5 | $0 | $0 | $3,000 | $3,000 |
How the three credits work
Startup cost credit — Internal Revenue Code §45E
Employers with 100 or fewer employees can claim a credit against qualified startup costs for the first three years. The credit is the greater of $500 or $250 per non-highly-compensated eligible employee, capped at $5,000 a year. Employers with 50 or fewer employees may claim 100% of qualified costs; employers with 51 to 100 employees claim 50%.
Auto-enrollment credit — §45T
Adding an eligible automatic contribution arrangement adds a flat $500 credit per year for three years.
Employer contribution credit — SECURE 2.0 §102
Employers with up to 50 employees may claim up to $1,000 per employee for contributions made on their behalf, phasing down to 100%, 100%, 75%, 50%, and 25% across years one through five. The credit reduces for employers with 51 to 100 employees and is unavailable for employees earning more than $100,000 (indexed).
Estimates are for general planning only and are not tax advice. Credits depend on your specific facts — confirm eligibility with your CPA. See our sources and references for the underlying IRS and DOL material, or read the 401(k) plan setup checklist.