Tax Law and News

5 Facts About the Small Business Health Care Tax Credit

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Written by Mike D'Avolio, CPA, JD
Modified Oct 17, 2017
1 min read

If you or any of your clients are small employers, there is a tax credit that can put money in your pockets.

The Small Business Health Care Tax Credit benefits employers that:

Offer coverage through the small business health options program, also known as the SHOP marketplace.
Have fewer than 25 full-time equivalent employees.
Pay an average wage of less than $50,000 a year.
Pay at least half of employee health insurance premiums.

Here are five facts about this credit:

The maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers.
To be eligible for the credit, you must pay premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program Marketplace, or qualify for an exception to this requirement.
The credit is available to eligible employers for two consecutive taxable years beginning in 2014 or later. You may be able to amend prior year tax returns to claim the credit for tax years 2010 through 2013 in addition to claiming this credit for those two consecutive years.
You can carry the credit back or forward to other tax years if you do not owe tax during the year.
You may get both a credit and a deduction for employee premium payments. Since the amount of your health insurance premium payments will be more than the total credit, if you are eligible, you can still claim a business expense deduction for the premiums in excess of the credit.

For more information, see the Small Business Health Care Tax Credit page on IRS.gov, and for information about insurance plans offered through the SHOP Marketplace, visit Healthcare.gov.

Mike D’Avolio, CPA, JD, is a tax law specialist for Intuit® ProConnect™ Group, where he has worked since 1987. He monitors legislative and regulatory activity, serves as a government liaison, circulates information to employees and customers, analyzes and tests software, trains employees and customers, and serves as a public relations representative. More from Mike D'Avolio, CPA, JD

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