Small Business Health Care Tax Credit Increases to 50%

Great news for small business!

For tax years beginning 2014 and beyond, the maximum credit is 50% of premiums paid for small business employers (up from 35%) and 35% of premiums paid for tax-exempt organizations.

A small employer qualifies for the credit if they meet the following criteria:

• It has fewer than 25 employees who work full-time, or a combination of full-time and part-time. For example, two half-time employees equal one full-time employee for purposes of the credit.
• It pays premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program Marketplace or qualifies for an exception to this requirement.
• The average annual wages of full-time equivalent employees are less than $51,000. The annual average wages will be adjusted annually for inflation.
• It pays a uniform percentage for all employees that is equal to at least 50 percent of the premium cost of the insurance coverage.

Find out more about the small business health care tax credit at IRS.gov/aca.

Find out more about the health care law at HealthCare.gov.

Davis & Hodgdon Associates CPAs has been assisting nonprofits, individuals and businesses with tax and accounting services in the Burlington Vermont Metro area for more than 20 years. If you have any questions or concerns please feel free to call 802.878.1963 or email [email protected].