Small Business Health Care tax credit

The Small Business Health Care tax credit is a United States tax credit available to small employers who pay health insurance premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace. Employers who purchase health insurance through the program may get a tax credit of up to 50% of their premium contributions. However, to qualify for the tax credit, they must meet certain standards. Firstly, employers have fewer than 25 employees.[1] Secondly, their employee salary must be less than an average of $50,000. Thirdly, employer must pay at least 50% of the full-time employee's premium costs. However, employers are not required to offer coverage to part-time employees (work fewer than 30 works/week) or dependents, or to seasonal workers who aren't considered full-time employees unless they work more than 120 days during the tax year.[2] Lastly, the coverage to those full-employment must be offered through SHOP Marketplace.[3]

Employers should apply to receive this tax credit on the annual business tax return[4] The tax credit is highest in particularly for small companies with fewer than 10 employees, with an average annual salary of $25,000 or less.[3]

For instance, if there are 10 employees with total wage of $250,000, employer will receive a tax credit amount of $35,000 as they contribute at least $70,000 to their premiums.[5]