Text Size: New tax credits available for small businesses
A tax break designed to help small employers cover the cost of providing health insurance for their employees may benefit your company beginning this tax year.
Small businesses are eligible if they:
- Provide health insurance to employees
- Have fewer than 25 full-time-equivalent employees who make, on average, less than $50,000 annually
- Contribute at least 50 percent of total premium costs
Businesses that have 10 or fewer full-time-equivalent employees, who make, on average, less than $25,000 annually, will receive the maximum tax credit of 35 percent. The credit is phased down for businesses with up to 24 employees.
If your company is eligible for the credit, you should receive a postcard from the IRS explaining the credit and the actions required to qualify. Businesses that are not currently eligible may still be able to take advantage of a transition period offered by the IRS, which allows them to take the tax credit this year and meet the requirements next year.
Small business will also be able to take the tax credit for ancillary products, such as dental and vision insurance, as well as medical insurance. The tax credit can be used from 2010 to 2013, and for any two additional years after that.
Learn more
- Visit the IRS small business tax credit Web page.
- If you didn’t receive a postcard, you may still be eligible.
- Example of how the credit applies (PDF).