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Small Business Health Care Tax Credit

Since 2010, certain qualifying small businesses have been able to claim tax credits of up to 35% (25% for tax-exempts) of the amounts paid for health insurance premiums for their employees.

Credit Changes
For tax years beginning in 2014 or later, there are these changes to the credit:

  • The maximum credit will increase to 50% of premiums paid (35% for tax-exempts)
  • The insurance must be purchased through the Small Business Health Options Program (SHOP) Marketplace
  • The credit will be available for two consecutive tax years

In addition, special transition rules apply for employers with non-calendar year health plans that use the SHOP Marketplace for the new plan year.

Other eligibility requirements are:

  • Employer must cover at least 50% of the cost of single health coverage  for each employee
  • Employer must have fewer than 25 full-time equivalent employees (FTE’s)
  • Average annual wages for the FTE’s must be less than $50,000

For more information on the tax credit, visit the IRS website at http://www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-for-Small-Employers.

For more information on the SHOP Marketplace, visit https://www.healthcare.gov/small-businesses/.

For additional information about this article contact Steve Wolf at [email protected] or 610-378-1175. Read more about Steve here.

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