Small Business Credit for Employers
The Small Business Health Care Tax Credit helps small businesses and small tax- exempt organizations afford the cost of covering their employees.
Eligibility Rules
- Providing health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
- Firm size. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).
- Average annual wage. A qualifying employer must pay average annual wages below $50,000.
- Both taxable (for profit) and tax-exempt firms qualify.
Amount of Credit
- Maximum Amount. The credit is worth up to 35 percent of a small business' premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
- Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.
Need more information?
Visit the IRS website at http://www.irs.gov/newsroom/article/0,,id=223666,00.html
Or check out the IRS YouTube© Video on the small business health credit at http://www.youtube.com/watch?v=85i1kzIG57k
