Cohen Urges Small Businesses to Take Advantage of New Health Care Tax Credit
WASHINGTON, D.C. – Congressman Steve Cohen (D-TN) urged small businesses in the 9th Congressional District to take advantage of a new tax break -- the Small Business Health Care Tax Credit -- available under the recently enacted health care reform law. The Internal Revenue Service (IRS) today began mailing postcards to small businesses to inform them of the tax credit and how to utilize it.
“If you run a small business and provide your employees with health care you might be eligible for a substantial tax break,” said Congressman Cohen. “Small companies that previously did not provide health care but now do are also eligible. This new tax break will help ensure our residents get the health care they need by providing employers with the incentive to provide coverage.”
The new tax break was included under the Patient Protection and Affordable Care Act that was recently signed into law by President Obama. It was created to encourage small businesses that do not provide health care to employees to begin doing so. It also encourages small businesses that have been providing coverage to their employees to continue giving them access to health care.
According to the IRS, the tax credit is available to small employers that pay at least half the cost of single coverage for their employees in 2010. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ low and moderate income workers.
For tax-years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. The maximum credit goes to smaller employers -- those with 10 or fewer full-time equivalent (FTE) employees -- paying annual average wages of $25,000 or less.
The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more. Because the eligibility rules are based in part on the number of FTEs, not the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals. The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more.
For more information about the Small Business Health Care Tax Credit please contact the IRS at 800-829-4933 or visit their website by clicking here.