The Tax Credits You’ve Never Heard Of (and How to Claim Them)
When most people think of tax credits, a few big names come to mind — the R&D Credit, maybe the Work Opportunity Tax Credit (WOTC) if they’ve heard of it. However, there are thousands of federal, state, and local programs available, many with benefits that often go unnoticed and unclaimed.
$64.8 billion in tax credits go unclaimed every year — most of it at the state level. That’s not a typo. And if you’re not actively looking for these opportunities, chances are you’re leaving money on the table.
The Three Big Categories You’re Probably Missing
1. Federal Programs Beyond the Headlines
You might know about WOTC — the federal credit that rewards employers for hiring individuals from specific target groups. But have you heard of the Federal Empowerment Zone (FEZ) Credit?
- What It Is: A location-based credit for businesses operating in federally designated “empowerment zones.”
- Why It’s Overlooked: The boundaries are drawn at the census tract level, meaning two businesses across the street from each other may have completely different eligibility requirements. And these boundaries change every year.
Pro Tip: Even if you’re no longer in a zone, you may be able to claim FEZ credits retroactively for up to three years.
2. State-Level “Piggyback” Credits
Many states offer their own hiring and training credits that can be stacked with federal programs. For example:
- Texas offers a TANF hiring credit.
- New York and Louisiana have youth hiring credits.
- Multiple states have training or retraining credits for upskilling employees.
The problem? There’s no universal database, and eligibility can hinge on details like an employee’s age or your exact address.
Pro Tip: If you’re screening for WOTC, a well-built system, like Ryze by HRlogics, can automatically add state credit screening questions — eliminating the need for extra forms for your new hires.
3. Industry-Specific Credits
Some credits are hidden in plain sight because they apply only to specific industries.
One of the most underutilized is the FICA Tip Credit, designed to offset the employer’s share of FICA taxes on tips. Traditionally available to the food and beverage industry, it was recently expanded to include the beauty industry as well.
Real-world example: A large restaurant group assumed they were claiming every available credit. A quick analysis revealed they’d been missing the FICA Tip Credit entirely — to the tune of $2.5 million over four years.
The Common Thread: Complexity
Why do these credits get missed?
- They require niche knowledge.
- Rules change frequently.
- Some require upfront applications or ongoing tracking.
Large corporations solve this by dedicating teams to credit discovery. Small and mid-sized businesses? They often rely on a CPA who’s juggling dozens of other responsibilities — and that’s where the gap forms.
How to Start Claiming Them
- Check your location: See if you’re in a FEZ or a state-level zone.
- Review your hires: Screen for both federal and state eligibility factors.
- Audit your industry-specific opportunities: Especially if you’re in food service, hospitality, beauty, manufacturing, retail, or construction.
You’ve earned these credits through your hiring, training, and operational decisions. The only question is whether you’re going to claim them — or let them join the billions left unclaimed every year.
Tri-Merit partners with HRlogics , and their mapping technology can check your locations, hiring history, and industry specifics against thousands of programs — in seconds. Our team then works with your CPA to ensure that those credits are reflected on your return. Contact us to see how much you might be missing.
