Overview of Eligibility Requirements for Small Employers

The Small Business Health Care Tax Credit is designed to encourage small businesses and small tax-exempt employers to offer health insurance coverage to their employees. The credit can be worth up to 50% of the amount a small business contributes toward employees’ premiums (35% for tax-exempt small employers).

In general, an employer may be eligible for the credit if it:

• Had fewer than 25 full-time equivalent employees;
• Paid an average wage of less than $52,000 a year;
• Paid at least half of its employees’ premium costs; and
• Paid premiums on behalf of employees enrolled in a qualified health plan offered through the Small Business Health Options Program (SHOP) Marketplace (with limited exceptions).

A Small Business Health Care Tax Credit Estimator is available from Healthcare.gov, and an IRS Small Business Health Care Tax Credit information page provides additional details on claiming the credit.