A great retirement plan is much more than a standard perk for your staff. It is one of the most powerful tools you have to lower your tax bill and keep more of your hard-earned money right where it belongs: on your balance sheet.  

When evaluating options for business retirement plans, Cincinnati business owners can tap into substantial tax savings simply by matching their company structure to the right account.  

This article answers the following questions:

• How do small business retirement plans create immediate tax savings?
• What is the best retirement plan for a solopreneur or self-employed business owner?
• How much can a business owner contribute to a Solo 401(k) or SEP IRA?
• How do SECURE 2.0 tax credits cover the setup and admin costs of a new retirement plan? 
• What is the difference between a tax deduction and a tax credit for business owners?   

1. The Solo 401(k): The Solopreneur’s Heavy Hitter

For businesses with no employees (other than a spouse), the Solo 401(k) offers unmatched benefits. Because you act as both the employer and the employee, you get to stack your tax deductions by routing money into the same account from two different directions.   

• The double-stack benefit: For 2026, you can move up to $24,500 out of your business paycheck directly into your Solo 401(k) account as a personal contribution. Then, wearing your employer hat, your business can make an additional pre-tax profit-sharing contribution (landing in that exact same Solo 401(k) account) of up to 25% of your business income.   
• Tax savings: Combined, you can shield up to $72,000 of income from taxes this year inside that single account. For owners aged 60 to 63, a special “super catch-up” provision allows an extra $11,250, pushing the total potential tax deduction to $83,250. Every dollar contributed directly reduces your personal taxable income. 

2. The SEP IRA: Simple and Immediate Tax Savings

If you want to maximize your tax deductions but don’t want the administrative upkeep of a traditional 401(k), the SEP IRA (Simplified Employee Pension) can be a path of least resistance.  

• A percentage of earnings: With this plan, your business moves cash directly into a specialized SEP IRA account set up for you (and any eligible staff). The business can contribute up to 25% of net business earnings into these accounts, capped at a maximum of $72,000 per person for 2026. 
• Flexible contributions: Unlike other plans, contributions are funded entirely by the employer, and the percentage can change each year. In a high-revenue year, you can maximize your deduction to lower your corporate tax bracket. If cash flow tightens the following year, you can drop your contribution to 0% without penalty.

3. The SIMPLE IRA: Growth with a Government Discount

For growing businesses with a small team, the SIMPLE IRA (Savings Incentive Match Plan for Employees) strikes a balance between providing a real employee benefit and lowering the company’s tax bill. 

• The matching write-off: Your employees can choose to route up to $17,000 of their pre-tax salary into their individual SIMPLE IRA accounts in 2026. As the owner, your mandatory company match (typically 3% of their pay) goes directly into those same SIMPLE IRA accounts and is fully deductible as a business expense. 
• Government discount for setup: When setting up business retirement plans, Cincinnati companies with 50 or fewer employees can use federal tax credits to directly offset 100% of the establishment and administrative costs of a new qualified plan, allowing many owners to bypass setup and management fees entirely. Thanks to active SECURE 2.0 rules, total tax savings can range anywhere from $1,500 a year for a solopreneur to a maximum of $55,000 a year for a company with 50 employees.   

The government splits this incentive into two separate buckets: 

• The startup and administration cost credit: The government credit covers 100% of what an ordinary plan provider charges to build and run the plan (recordkeeping, legal documents, and compliance). It is capped at $5,000 per year for the first three years. If a plan costs $2,000 to run, the business tax bill drops by $2,000. 
• The contribution match credit: The government gives the owner a direct credit of up to $1,000 per employee to offset the money the business contributes to the staff’s retirement accounts (for employees making under $110,000 in 2026). 

A tax credit is more valuable than a tax deduction. A deduction simply lowers taxable income numbers on paper, whereas a credit acts like a gift card for a tax bill, reducing the amount owed to the IRS dollar-for-dollar.  

When evaluating these options, the goal is to find the incentives that benefit your business the most, so you can both provide for employees and unlock tax savings.   

Disclosure: Harvest Financial Advisors is a Registered Investment Adviser. This content is for informational purposes only and does not constitute a complete description of our investment services or personalized financial, tax, or legal advice. Contribution limits, tax laws (including provisions of SECURE 2.0), and plan qualifications are subject to change and annual IRS adjustment. Always consult with a qualified tax professional or CPA regarding your specific business structure before implementing any strategy discussed here.

Sources 

Internal Revenue Service. “401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500.” News release IR-2025-111, Nov. 13, 2025. https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500

Internal Revenue Service. “Instructions for Form 8881 (Credit for Small Employer Pension Plan Startup Costs).” Department of the Treasury, Dec. 2025. https://www.irs.gov/instructions/i8881

Internal Revenue Service. “Retirement topics – 401(k) and profit-sharing plan contribution limits.” IRS.gov, updated Nov. 2025. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits

Fidelity Investments. “Solo 401(k) contribution limits 2025 and 2026.” Fidelity Learning Center, updated Nov. 2025. https://www.fidelity.com/learning-center/smart-money/solo-401k-contribution-limits

ADP. “SECURE 2.0 Tax Credits for 401(k) Plans.” ADP Articles and Insights, 2025. https://www.adp.com/resources/articles-and-insights/articles/s/secure-2-tax-credits-401k.aspx