The Small Business Health Care Credit is a tax credit to small businesses that provide health insurance coverage to their employees. In order to qualify, the following criteria must be met:
- You must pay the premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) marketplace.
- You must cover at least 50% of the employee-only health care coverage for each employee.
- You have fewer than 25 full time “equivalent” employees.
- The average annual wages must be less than $50,000 per year.
The maximum credit is equal to 50% of the premiums paid (subject to limitations) and is available for two consecutive taxable years. Any unused credit can be carried forward to future tax years.