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Tax Credits for Small Business Employers

tax-creditsOnly 45% of America’s smallest firms can afford to offer health care benefits. 60% of America’s uninsured are small business owners, employees, and their families.1

Under the new Affordable Care Act, tax credits will be provided for qualifying small business employers that purchase health insurance for their employees. In order to qualify for the minimum credit, they must:

  • have the equivalent of fewer than 25 full-time employees
  • average annual wages of less than $50,000

The maximum credit will be available to employers with 10 or fewer full-time equivalent employees and average annual wages of less than $25,000. In all cases, the employer must contribute at least 50 percent of the total premium cost to be eligible.

From 2010 through 2013, eligible employers will receive a small business credit of up to 35 percent of their contribution toward the employee’s health insurance premium. Tax-exempt nonprofit small businesses meeting the above requirements are eligible for tax credits of up to 25 percent of their contribution.2

In addition, beginning in 2014, eligible employers who purchase coverage through a Health Insurance Exchange can receive a tax credit for two years of up to 50 percent of their contribution.

An estimated 53,900 small businesses in Connecticut3 and 4 million small businesses nationwide could benefit from these tax credits, which the U.S. Government estimates a total $40 billion in relief for small firms over the next 10 years. Moreover, if their firms do not offer coverage, millions of workers at these businesses and their families may be eligible for their own tax credits if they purchase coverage through the new Health insurance Exchanges.4

If you are a small employer (business or tax-exempt) that provides health insurance coverage to your employees, determine if you may qualify for the Small Business Health Care Tax Credit.

Follow these 3 simple steps:


5, "Health Insurance Reform at a Glance: Helping Small Businesses", "Health Insurance Reform at a Glance: Helping Small Businesses", "The Affordable Care Act: Immediate Benefits for Connecticut", "The Affordable Care Act: Increasing Choice and Saving Money for Small Businesses" 5Internal Revenue Services, "3 Simple Steps"