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. 

For more information, log on to

Continue Learning about Healthcare Reform

How to Pick a Plan in the Health Insurance Marketplace
How to Pick a Plan in the Health Insurance Marketplace
Now that the Affordable Care Act’s (ACA) Health Insurance Marketplaces are open for business, many people are shopping for insurance for the first tim...
Read More
How can I get a tax break on health coverage as a self-employed person?
You may be eligible for a specific tax deduction that is generally available to people who are self-...
More Answers
Where can I find out more about health care reform?
Very few of us have time to read, let alone interpret, the nearly 1,000-page U.S. healthcare reform ...
More Answers
Why Is Our Healthcare System Broken?
Why Is Our Healthcare System Broken?

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.