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Small Business Health Care Tax Credit
Changes to the SBHCTC beginning in 2014:
*SHOP, or Small Business Health Options Program, is the Health Insurance Marketplace for small business and tax-exempt employers.Small Business Health Care Tax Credit for Small Employers
- The credit increases to 50 percent for small businesses and 35 percent for tax-exempt employers.
- You must purchase insurance for your employees through SHOP.*
- The credit is only available to you for 2 consecutive years.
Federal budget sequestration required cuts will reduce the refundable portion of the Small Business Health Care Tax Credit for certain small tax-exempt employers under the Internal Revenue Code section 45R. The refundable portion of the claim will be reduced by 8.7 percent.Review additional information about the effect of sequestration on the Small Business Health Care Tax Credit to see if this has potential impact for you.
Small businesses and tax-exempt organizations may be eligible for a valuable tax credit – the Small Business Health Care Tax Credit. The credit applies to small employers who offer health insurance coverage for the first time or maintain coverage they already have, and is specifically targeted for those with low- and moderate-income workers. In general, the credit is available to small employers and tax-exempt organizations that pay at least half the cost of single coverage for their employees.
If you’re an employer who may be eligible for the Small Business Health Care Tax Credit, you can use the Small Business Health Care Tax Credit Estimator. The credit is designed to encourage small businesses to offer health insurance coverage for the first time or maintain coverage they already have. For some employers and tax-exempt organizations, this could save thousands of dollars by providing a credit against income tax (a refundable credit for certain tax-exempt organizations).
For tax years 2010 through 2013, small businesses can claim up to 35 percent, and tax-exempt organizations can claim up to 25 percent. For tax years 2014 and later, there are changes to the credit.
- Small businesses can claim up to 50 percent and tax-exempt organizations up to 35 percent.
- You must purchase insurance for your employees through the Small Business Health Options (SHOP) Marketplace.
- The credit is only available to you for two consecutive years.
This tax credit is included in the Patient Protection and Affordable Care Act approved by Congress in early 2010, and signed into law by President Barack Obama. This credit is one of the first provisions of the bill to go into effect. Eligible small businesses and tax-exempt organizations can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011.
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