Small Business Heath Care Tax Credit

This new tax credit is part of the recently signed Affordable Care Act (healthcare).  It helps small businesses and small tax exempt organizations afford the cost of providing health care coverage for their employees. 

Small businesses started receiving postcards from the IRS last month with details on this new tax credit.  Here are the major points:

• Credit is worth up to 35% of the premium costs paid by a small business in 2010 thru 2013.  In 2014, the credit is increased to 50%
• Credit phases out for small businesses with average wages between $25,000 and $50,000 and for firms with with the equivalent of between 10 and 25 full time (FTE) employees
• A qualifying employer must cover at least 50% of the cost of health care coverage
• A qualifying employer must have less than 25 (FTE) workers

Clearly, this tax credit is designed for the very small businesses that are the backbone of this country in an effort to encourage them to provide valuable health care for their employees.  Many employers have always wanted to provide the coverage but could not afford to do so.  Hopefully, this will give them an incentive to do so. 

I have also provided a youtube link for a video that explains this credit in more detail:  http://www.youtube.com/watch?v=85i1kzIG57k