New Small Business Tax Credit for Providing Health Care Coverage

Understanding the verbal jargon related to the new health care legislation can be confusing for most small business owners. Essentially, the law entices small employers to provide health care coverage by refunding income taxes that small businesses pay.

The small business only needs to pay for 50% of the health care coverage to get the tax credit. The passage of the Patient Protection and Affordable Care Act (PPACA) created two new small business tax credits with the maximum credit going to employers with less than 10 employees. For 2010 to 2013, there is a 35% non-refundable credit, and starting in 2014 the non-refundable credit increases to 50%. If you want to know more, follow this link to an easily understandable report posted by the Congressional Research Service with example on how to calculated the credit.

www.ncsl.org/documents/health/SBtaxCredits.pdf

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