In an effort to extend health care benefits to more people, the IRS introduced the small business healthcare tax credit. This credit may benefit employers that have fewer than 25 full-time equivalent employees, offer a qualified health plan through a Small Business Health Options Program Marketplace, and pay at least 50% of the cost of the employee-only health care coverage. There may also be some average wage requirements.
The maximum credit covers:
- 50% of premiums paid for small business employers
- 35% of premiums paid for small tax-exempt employers
The credit may also be available for two consecutive taxable years.
* This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov5
Footnotes and Sources
- IRS.gov, July 30, 2021