Under the recently enacted health care reform legislation, many small businesses and tax-exempt organizations are now eligible for a new federal tax credit. This credit is designed to encourage small employers to offer health insurance for the first time or maintain coverage they already have.
The IRS said that the credit is generally available to small employers that pay at least half the cost of single coverage for their employees. The maximum credit is 35 percent of the premiums paid in 2010 by eligible small employers and 25 percent of the premiums paid by eligible tax-exempt organizations. In 2014, these maximum credits will increase to 50 percent for eligible small employers and 35 percent for eligible tax-exempt organizations.
Eligible small businesses can claim the credit as part of the general business credit starting with their 2010 income tax return. For tax-exempt employers, however, the IRS will provide further information on how to claim the credit.
For additional information, please visit the IRS page on this topic.