What is the small business tax credit?

The small business tax credit is a provision of the Patient Protection and Affordable Care Act (PPACA) that can help employers of small businesses save money. If you qualify as a small business employer, the tax credit is worth up to 50 percent of your contribution toward your employees' premium costs (up to 35% for tax-exempt employers).

The small business health care tax credit benefits employers who:
  • have fewer than 25 full-time equivalent (FTE) employees
  • pay an average wage of less than $50,000 a year
  • pay at least half of employees' health insurance premiums
To be eligible for the small business tax credit, you must have purchased coverage through the Small Business Health Options Program (SHOP) marketplace. You don’t need to offer coverage to your part-time employees (those working fewer than 30 hours per week) or to dependents to qualify for the tax credit. The tax credit is highest for companies with fewer than 10 employees who are paid an average of $25,000 or less. 

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Important: This content reflects information from various individuals and organizations and may offer alternative or opposing points of view. It should not be used for medical advice, diagnosis or treatment. As always, you should consult with your healthcare provider about your specific health needs.