{"id":1514,"date":"2025-08-08T14:59:12","date_gmt":"2025-08-08T14:59:12","guid":{"rendered":"https:\/\/leyton.majjane.agency\/us\/insights\/articles\/qualified-small-business-qsb-payroll-tax-credit\/"},"modified":"2026-07-26T16:24:23","modified_gmt":"2026-07-26T14:24:23","slug":"qualified-small-business-qsb-payroll-tax-credit","status":"publish","type":"article","link":"https:\/\/leyton.com\/us\/insights\/articles\/qualified-small-business-qsb-payroll-tax-credit\/","title":{"rendered":"Qualified Small Business (QSB) Payroll Tax Credit"},"content":{"rendered":"<h2 class=\"wp-block-heading\">What is the QSB Payroll Tax Credit?<\/strong>&nbsp;<\/h2>\n<p>There are two ways for businesses to utilize the <strong><a href=\"https:\/\/leyton.com\/us\/rd-tax-credit-2025\/\">Research and Development Tax Credit<\/a><\/strong>: <\/p>\n<div class=\"wp-block-leyton-orion-block-list list-block undefined\">\n<div class=\"container\">\n<div class=\"row\">\n<div class=\"col\">\n<ul>\n<li>Offset income tax liability<\/li>\n<li>Offset payroll tax liability<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p>The <strong><a href=\"https:\/\/leyton.com\/us\/payroll-tax-credit\/\">payroll tax credit<\/a><\/strong> is most beneficial for new <strong>small businesses<\/strong> that are still generating a taxable loss, but still incur payroll costs. <\/p>\n<p>This election benefits eligible startups that have little or no income tax liability according to their lack of taxable profits.&nbsp;&nbsp;<\/p>\n<p>If qualified, a business can elect to apply a portion (or all) of the <strong>research credit <\/strong>for the taxable year as a <strong>payroll tax credit <\/strong>against the employer portion of the old-age, survivors, and disability insurance tax (&#8220;social security tax&#8221; equating to about 6.2% of gross wages paid per quarter).&nbsp;<\/p>\n<h2 class=\"wp-block-heading\"><strong>QSB Payroll Tax Credit History<\/h2>\n<p>In 2015, the<strong> Protecting Americans from Tax Hikes (PATH) Act enacted IRC 41(h) and 3111(f<\/strong>), which allow a qualified small business (\u201cQSB\u201d) to elect to apply a portion of the research credit for the taxable year as a payroll tax credit against the employer portion of the social security tax under the Federal Insurance Contributions Act.<\/p>\n<p>For taxable years beginning afterDecember 31, 2015, and before January 1, 2023, the maximum research credit that could be elected in a tax year to be applied toward payroll taxes was $250,000.\u202f<\/p>\n<p>In 2022, the Inflation Reduction Act of 2022 (IRA) increased the annual payroll election amount to <strong>$500,000 for tax years beginning after December 31, 2022, for qualified research activities. <\/strong>In addition to the increased limit, the IRA also made changes to the taxes the credit can offset. Now, the payroll tax credit is first used to offset the employer&#8217;s share of social security tax up to the original $250,000 per quarter. Any remaining credit then reduces the employer&#8217;s share of Medicare tax for the quarter, up to an additional $250,000. If any credit still remains after offsetting both the employer&#8217;s share of Social Security and Medicare taxes, the remainder is carried forward to the next quarter. In total, an employer is able to offset up to $250,000 of their Social Security tax and $250,000 of their Medicare tax per eligible year.<\/p>\n<h2 class=\"wp-block-heading\">How to Qualify?<\/h2>\n<p>To qualify as a small business: <\/p>\n<div class=\"wp-block-leyton-orion-block-list list-block undefined\">\n<div class=\"container\">\n<div class=\"row\">\n<div class=\"col\">\n<ul>\n<li>The entity\u2019s gross receipts for the tax year must be less than <strong>$5 million<\/strong><\/li>\n<li>The entity can <strong>not have incurred gross receipts<\/strong> in any tax years preceding<strong> the five-tax-year period<\/strong>, including the <strong>current tax year <\/strong>being claimed.  <\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<h2 class=\"wp-block-heading\">How to File for QSB Payroll Tax Credit?<\/h2>\n<p>You must make the election and calculate the credit amount on Form 6765 (Credit for Increasing Research Activities).<\/p>\n<p>Then, take the amount from line 44 of Form 6765 and report it on Form 8974 (QSB Payroll Tax Credit for Increasing Research Activities).<\/p>\n<p>The taxpaying entity\u2019s Federal income tax return includes <strong>form 6765<\/strong>. <\/p>\n<p><strong>Form 8974 <\/strong>must be subsequently provided to the company\u2019s payroll provider to enact the future payroll tax savings.&nbsp;&nbsp;<\/p>\n<p>You must make the payroll tax credit election by the due date of your originally filed income tax return, including any extensions.<\/p>\n<p>The payroll tax credit becomes available in the first calendar quarter after the qualified small business files its income tax return.<\/p>\n<p>You calculate the R&amp;D tax credit on Form 6765. It typically applies against your income tax liability.<\/p>\n<p>Reach out to us if you qualify as a SM and would like to unlock the<strong> R&amp;D tax credit<\/strong> for <strong>payroll purposes<\/strong>!<\/p>\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<div class=\"wp-block-buttons\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/leyton.com\/us\/schedule-a-call\/\">Reach out to us<\/a><\/div>\n<\/div>\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<div class=\"wp-block-leyton-orion-block-list list-block undefined\">\n<div class=\"container\">\n<div class=\"row\">\n<div class=\"col\">\n<h2>Sources<\/h2>\n<ul>\n<li><a href=\"https:\/\/www.irs.gov\/businesses\/small-businesses-self-employed\/qualified-small-business-payroll-tax-credit-for-increasing-research-activities\">IRS &#8211; Qualified small business payroll tax credit for increasing research activities<\/a><\/li>\n<li><a href=\"https:\/\/www.irs.gov\/credits-deductions\/research-credit-against-payroll-tax-for-small-businesses\">IRS &#8211; Research credit against payroll tax for small businesses<\/a><\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>What is the QSB Payroll Tax Credit?&nbsp; There are two ways for businesses to utilize the Research and Development Tax Credit: Offset income tax liability Offset payroll tax liability The payroll tax credit is most beneficial for new small businesses that are still generating a taxable loss, but still incur payroll costs. This election benefits [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1515,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[481,75],"tags":[487],"expertise":[370],"class_list":["post-1514","article","type-article","status-publish","format-standard","has-post-thumbnail","hentry","category-payroll-rd-tax-credit-en","category-rd-tax-credit-en","tag-small-business-en","expertise-innovation-funding-incentives"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.1 (Yoast SEO v28.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Qualified Small Business (QSB) Payroll Tax Credit - Leyton United States<\/title>\n<meta name=\"description\" content=\"Learn how the QSB payroll tax credit allows small businesses to offset payroll tax liability using the R&amp;D tax credit.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/leyton.com\/us\/insights\/articles\/qualified-small-business-qsb-payroll-tax-credit\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Qualified Small Business (QSB) Payroll Tax Credit\" \/>\n<meta property=\"og:description\" content=\"Learn how the QSB payroll tax credit allows small businesses to offset payroll tax liability using the R&amp;D tax credit.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/leyton.com\/us\/insights\/articles\/qualified-small-business-qsb-payroll-tax-credit\/\" \/>\n<meta property=\"og:site_name\" content=\"Leyton United States\" \/>\n<meta property=\"article:modified_time\" content=\"2026-07-26T14:24:23+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/leyton.com\/wp-content\/blogs.dir\/4\/files\/2025\/08\/Canada-Website-inside-pictures-13-e1754660713367.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1276\" \/>\n\t<meta property=\"og:image:height\" content=\"655\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/leyton.com\\\/us\\\/insights\\\/articles\\\/qualified-small-business-qsb-payroll-tax-credit\\\/\",\"url\":\"https:\\\/\\\/leyton.com\\\/us\\\/insights\\\/articles\\\/qualified-small-business-qsb-payroll-tax-credit\\\/\",\"name\":\"Qualified Small Business (QSB) Payroll Tax Credit - 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