According to a fact sheet distributed by the U.S. Department of the Treasury, some small businesses that provide health care coverage support for employees could be eligible for tax credits to help subsidize the cost of health care coverage. Those businesses who qualify for the credit can begin in 2010 and can claim the credit for up to six years. The credit is worth up to 35 percent of the cost of the business’ insurance premium for 2010 through 2013, with eligibility for up to 50 percent beginning in 2014.

There are four qualifying factors to determine eligibility for the tax credit:

  1. Businesses must have less than the equivalent of 25 full-time workers (10 or fewer employees for maximum allowable credit)
  2. Average salary must be less than $25,000 per year for maximum credit, up to $50,000 per year for partial credit 
  3. Businesses must offer health care coverage to employees
  4. Businesses must cover at least 50 percent of the cost of employee health insurance to receive the maximum tax credit

While government fact sheets promote that up to four million small businesses may be eligible for the tax credit, they do not estimate how many are eligible for the maximum credit, nor even how many will actually qualify. PIA recommends consulting your tax professional to help determine your eligibility and qualifying tax credit.

Sources for more information:

For general information and guidelines, view the IRS Small Business Health Care Tax Credit information page.
For more detailed information on eligibility requirements and partial credit, view the IRS Small Business Health Care Tax Credit: Frequently Asked Questions page.