Tax Credit for Small Employers Providing Health Insurance

The small business health care tax credit applies to employers covering at least half the premium cost of a qualified health plan for each enrolled employee.  Eligible employers are those with fewer than 25 full time equivalent employees earning average wages of less than $50,000 per year.  In determining eligibility, business owners and their family members aren’t included in the number of total employees and their earnings are not included in the average wage calculation.

The rules for calculating the credit are somewhat complex. The credit is a sliding scale with smaller businesses getting a larger percentage of expenditures for the credit.  Expenses not eligible for the credit can still be deducted as business expenses.

© 2012 Parsonage Vandenack Williams LLC

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