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(Washington D.C.)- The Internal Revenue Service began mailing postcards to 132,082 Michigan small businesses today to alert them to a new tax credit available this year for small businesses that provide their employees with health insurance. The tax credit was part of the health care reform legislation signed into law last month.
“Health care costs for small businesses have grown 129% since 2000, putting affordable care out of reach for so many Michigan small business owners and employees,” said Rep. Levin. “The tax credits will provide immediate relief for small businesses and provide a bridge until the exchanges open and begin offering small businesses an array of affordable health care choices.”
Health care reform legislation provides $40 billion in tax credits for small businesses nationally to help them offer employee health insurance coverage. More than 60 percent of small employers, or more than four million firms, will be eligible for these credits.
For 2010 to 2013, the maximum credit is 35 percent of a small business’s premium costs. On January 1, 2014, this rate increases to 50 percent. Firms can claim the credit for 2010 through 2013 and for any two years after that. To qualify for the tax credit, businesses must have fewer than 25 employees and average annual wages of $50,000 or less—and the full tax credit is available to businesses with 10 or fewer employees and average annual wages of $25,000 or less.
In 2014, small businesses will be able to begin shopping on the Health Insurance Exchanges. These competitive marketplaces will allow small businesses and their employees, the self-employed, and the uninsured to purchase affordable coverage. Small businesses will be able to pool their buying power on the exchanges and have access to the same quality plans only available to large firms today. Additionally, shopping on the exchanges will reduce small business administrative costs.
Click here to view the IRS postcard.
Click here to view the Small Business Health Care Guide.
The IRS has also provided more information about the credit, including a step-by-step guide and answers to frequently asked questions.
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