Do you qualify for the Small Business Healthcare Tax Credit?

You’ve already made the big decision to offer health insurance to your employees. Providing benefits like health insurance is one of the best ways to keep current employees happy and attract new ones, so this is a smart move.

Fortunately, the government recognizes the importance of supporting small businesses in this endeavor and offers the Small Business Healthcare Tax Credit as a helping hand. In this post, we’ll discuss incentive eligibility, the savings you can expect if you qualify, and how you can claim your small business healthcare tax credit.


What it is

The federal law provides a tax credit to eligible small business employers who offer health insurance coverage to their employees. In other words, it gives employers a little help in offsetting the cost of providing health insurance for your team.



For a business to claim the small business health care tax credit, they need to enroll in a Small Business Health Options Program (SHOP). A business can only qualify for the tax credit if the following conditions are met:

  • You have fewer than 25 full-time equivalent (FTE) employees.
  • Your average employee salary is about $56,000 per year or less.
  • You pay at least 50 percent of your full-time employee’s premium costs.
  • You offer SHOP coverage to all your full-time employees. (You don’t have to offer it to dependents or employees working fewer than 30 hours per week to qualify for the tax credit.)

The Small Business Health Care Tax Credit Estimator can help employers determine their businesses eligibility and how much the credit could be worth to them.


How it benefits you

The smaller the employer, the bigger the credit. In general, the tax credit is highest for companies with fewer than 10 employees who are paid an average of $27,000 or less per year. The maximum credit is only available to eligible employers for two consecutive years, so it’s important to take advantage of it right away. The maximum credit is one of the following:

  • 50 percent of premiums paid for small business employers.
  • 35 percent of premiums paid for small tax-exempt employers.


How to claim it

If you think your business qualifies, you’ll need to complete  Form 8941, Credit for Small Employer Health Insurance Premium, to calculate your potential credit. As a small business, you’ll include the amount as the general business credit on your annual business tax return.



For SHOP how-to guides, fact sheets, tools and other resources for employers, go to

Informed decisions lead to empowered businesses. Take advantage of the Small Business Healthcare Tax Credit and make strides toward a healthier and more prosperous future for your small business.

Tax laws can be complex. Consulting with a tax professional can ensure you navigate the process correctly and maximize your eligible credit.






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