The U.S. unemployment rate and claims remain historically low. Job openings are high. The labor market is tight. Immigration crackdowns aren't helping. AI doesn't seem to be having much of an impact … yet. It’s not easy finding talent.

Ask your clients and they’ll tell you that they’re looking for good people. Attracting and retaining talent continues to be among the top concerns of all small and midsize businesses, particularly when they’re competing with much larger corporations for a limited labor pool and other organizations that have more resources.

As CPAs, we can help our clients address this issue. How? By making sure they're aware of several ways that the federal government helps to pay for their company’s employee benefits.

Paid Leave Credit

Businesses with more than 50 employees generally must comply with the Family and Medical Leave Act and provide up to 20 work weeks of unpaid leave for employees who need the time off for having a child, taking care of a dependents or other reasons.

But if your client is willing to pay a portion (at least 50 percent) of their compensation while on leave, there's a tax credit available—the Employer Credit for Paid Family and Medical Leave under Internal Revenue Code Section 45S—that could reimburse them for between 12.5 percent to 25 percent of what they paid.

The 2025 One Big Beautiful Bill Act (OBBBA) expanded this credit to include paid leave insurance options and made it permanent.

Education Tax Deduction

People like to learn and, as an employer, your clients can help. Thanks to an education assistance benefit, an employer can deduct (and employee excludes) up to $5,250 per employee per year in tax-free educational assistance provided under a qualified Section 127 written plan.

The appealing part of this deduction is that “education” doesn't necessarily have to be job related. Sure, it’s good to get reimbursed for a professional class or certification, but if your employee wants to learn origami, take an advanced Japanese cooking class or horse-riding lessons, you can use this deduction for those purposes too.

Some of my clients encourage their employees to do something different from their work, just to add variety and other interests to their lives.

Student Loans

In addition to the education assistance deduction, I would be remiss for not mentioning a provision that allows employers to fully deduct (and employees to avoid income) on the cost of reimbursing as much as $5,250 for student loan payments that their employees make, which is a huge help, particularly to younger workers saddled with high college debt.

Dependent Care

Many employees have issues finding childcare for their kids, and when they can’t find the care, they often can’t come to work. The good news is that the federal government provides help for employers who want to help their employees.

Under Internal Revenue Code Section 125, employers can establish “cafeteria plans” that allow employees to pay for qualified benefits with up to $7,500 in pre-tax dollars for eligible dependent care expenses for children under the age of 13. For those employers looking to build a childcare facility, contract with a facility or partner with a childcare provider, up to $600,000 of tax credits are available based on a percentage of what’s spent and depending on the option chosen.

One other note: the OBBBA increased the childcare credit that can be calculated now based on $3,000 of eligible expenses for one child, or up to $6,000 for two or more children. Some businesses are hiring their CPAs to assist their employees in maximizing the use of this credit on their individual returns, because the more help an employee gets with their childcare needs, the more time in the office they’re able to spend.

Commuting

Gas prices are high and many employees, particularly those in urban areas, are turning to public transportation to keep their expenses low. As an employer, your client can help by making tax-free reimbursements to those employees for up to $340 per month.

Adoption

If an employee adopts an eligible child, and depending on their income, they may be able to claim the Adoption Credit or income exclusion for employer-provided adoption benefits. Qualified adoption expenses are limited to $17,670 per qualifying child with up to $5,120 refundable. I have several clients who offer this as a benefit and yet have never had the chance to use it. But it's a nice benefit to offer and, in my opinion, does say a lot about the person who owns the business.

Health Savings Accounts

This is a no-brainer. Any business that has a high-deductible health plan (and most SMBs do) can also attach a Health Savings Account (HSA) program to that policy. HSAs have become enormously popular for employees over the past few years.

In 2026, an individual can contribute as much as $4,400 pre-tax to their HSA (family contribution is $8,750), and those over 55 years can contribute another $1,000.

Those funds can then be used for a variety of unreimbursed health care expenses ranging from over-the-counter pharmaceuticals to acupuncture. What's great about HSAs is that the employee doesn't lose what they’ve contributed at the end of the year, their balances continue to grow, and they can take their money with them if they change jobs. Many I know say it’s like having a 401(k) for their health care, and they're not wrong.

SECURE Acts

Speaking of 401(k)s, many of my clients are still unaware of all the ways the two SECURE Acts from 2019 and 2022 can provide government assistance for setting up 401(k) retirement plans.

There are tax credits available for many eligible businesses, not only for starting up a new 401(k) plans but also for employers who match their employees’ contributions. Employers can also match student loan payments and enroll more part-timers in their plans, which could increase their loyalty.

Trump IRAs

Starting this year, individuals can open Trump IRA accounts to put money away for their kids. Individuals and families can annually contribute up to $5,000, which is excluded from the employee’s income under a qualifying employer program.

However, your clients can contribute half of that on a pre-tax basis to their employees’ accounts. The funds are then available to the child at 18 and can be withdrawn subject to typical IRA requirements. New parents with children born from Jan. 1, 2026, through Dec. 31, 2028, will get a $1,000 contribution from the government, no strings attached, but subject to citizenship, having a valid Social Security Number and other requirements.

Clients often assume a richer benefits package is beyond their budget. Before they rule it out, CPAs should show them how federal tax credits and employee tax exclusions can lower the cost.