Listed below are highlights from the implementation of the Small Business Health Care Tax Credit, which is part of the newly-enacted health insurance reform legislation. Below the links is a fact sheet on the Small Business Health Care Tax Credit, which also includes “Five Additional Ways Health Reform Will Help Small Businesses.” Additionally, listed below are links to extra informational resources on the tax credit:
- IRS News Release on Small Business Health Care Tax Credit
- 3 Simple Steps on Determining Eligibility for Small Business Health Care Tax Credit
- Small Business Health Care Tax Credit Scenarios
- FAQs (Frequently Asked Questions) on Small Business Health Care Tax Credit
FACT SHEET: Small Business Health Care Tax Credit
The new health insurance reform legislation includes a Small Business Health Care Tax Credit to help small businesses afford the cost of covering their workers.
Key Facts about the Small Business Health Care Tax Credit
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Key Elements
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Benefit from Small Business Health Care Tax Credit: Four Cases
Example 1: Auto Repair Shop with 10 Employees Gets $24,500 Credit for 2010 Main Street Mechanic:
2010 Tax Credit: $24,500 (35% credit) 2014 Tax Credit: $35,000 (50% credit) |
Example 2: Restaurant with 40 Part-Time Employees Gets $28,000 Credit for 2010 Downtown Diner:
2010 Tax Credit: $28,000 (35% credit with phase-out) 2014 Tax Credit: $40,000 (50% credit with phase-out) |
Example 3: Foster Care Non-Profit with 9 Employees Gets $18,000 Credit for 2010 First Street Family Services.org:
2010 Tax Credit: $18,000 (25% credit) 2014 Tax Credit: $25,200 (35% credit) |
Example 4: Manufacturing Company with 12 Employees Gets $14,700 Credit for 2010 Acme Air Conditioning, LLC:
2010 Tax Credit: $14,700 (35% credit with phase-out) 2014 Tax Credit: $21,000 (50% credit with phase-out) |
Five Additional Ways Health Reform will Help Small Businesses
Small businesses want to provide health coverage for their workers, but they face extraordinary challenges in doing so, including premiums that are 18 percent higher on average than large businesses pay for the same coverage. Health reform legislation signed by the Presidents includes a number of important benefits to help make coverage more affordable:
1. Creates Health Insurance Exchanges to Increase Bargaining Power and Reduce Administrative Costs.
2. Ends Price Discrimination against Small Businesses with Sick Workers.
3. Increases Health Care Security to Unlock Entrepreneurship.
4. Reduces the Hidden Tax on Small Business Employees with Health Insurance.
5. Reduces Premiums in the Small Group Market.
[1] The credit rates are lower for non-profits to ensure that the value of the credit is approximately equal to that provided to for-profit firms that cannot claim a tax deduction for the amount of the credit claimed.
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Current Tools by Small Business Majority
Small Business Tax Credit Calculator
Here is an interactive tax credit calculator that shows the immediate 2010-2013 as well as full 2014 tax credit. There is also a link to the IRS website that has additional information on the tax credit that is being updated. Click here.
FAQ for Small Business Owners
Geared for small business owners here are the most frequent questions and answers small business owners are asking. Both as interactive and PDF. Click here.
State Small Business & Healthcare Reform Reports
Two Page state reports summarizes facts on small business for each state – Cost of doing nothing, small business opinion research, key economic data on small business, healthcare reform facts. Click here.
Explaining Healthcare reform to Small Business
In summary and detail this document provides a template on how to explain the benefits and impacts of healthcare reform to small business groups and owners. (downloadable word document for easy use) Click here.
Small Business Healthcare reform Handout
This document is for distribution to small business groups and owners. It explains the benefits and impacts of healthcare reform to small business groups and owners. Click here