Small business owners should take note of new tax credit

The Internal Revenue Service has announced a new tax credit aimed at helping more employees of small businesses get health insurance coverage. The credit is part of the sweeping health care reform legislation that was signed into law in March.

According to the IRS announcement, the credit is available to small businesses that pay at least half of their employees' single coverage costs.

"This credit provides a real boost to eligible small businesses by helping them afford health coverage for their employees. We urge small businesses and tax-exempt employers to look closely at this important tax break - which is already effective - to see if they already qualify," said IRS Commissioner Doug Shulman.

The maximum credit is 35 percent of premiums paid in 2010 by an eligible small business, according to the IRS. In 2014, the maximum credit would increase to 50 percent of the premiums paid by the employers, with 35 percent credits applying to tax-exempt organizations.

The credit is geared at companies that have fewer than 25 full-time employees averaging less than $50,000 in pay per year, although some larger companies may qualify.

Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.
Posted To: Tax Ranger's Blog By: Tax Ranger On: Saturday, April 03, 2010
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