The Small Business Health Care Tax Credit

Providing health insurance for your employees may seem like a costly investment, but small businesses can take advantage of this perk and deduct their related expenses from federal business taxes. Offering quality healthcare coverage could be the key to attracting top talent in your field while also saving money on taxes.

If your business participates in the Small Business Health Options Program (SHOP), you may qualify for the Small Business Health Care Tax Credit.

As a small business owner, you might qualify for The Small Business Health Care Tax Credit, worth up to 50% of your employees’ premiums, but of course, it’s essential to double-check with an accountant before claiming any deduction – not all costs qualify.

Small tax-exempt organizations can also take advantage of this great opportunity, but their credit is worth up to 35% of employees’ premiums.

How To Qualify For The Small Business Healthcare Tax Credit

The tax credit is available for businesses that fit all of the following criteria:

  • There are fewer than 25 full-time employees
  • The average employee salary is $56,000 or less
  • You offer coverage to all of your full-time staff members
  • You pay at least 50% of employees’ premium costs

The federal tax credit is highest for companies with fewer than 10 employees who are paid an average of $27,000 or less. The smaller the business, the bigger the reward!

How To Claim The Small Business Health Care Tax Credit

As a small business owner, you can take advantage of the credit for health insurance premiums by filing Form 8941. This tax benefit will then be included in your general business credit reported on Form 3800 and ultimately shown as one single figure on your 1040 return. To ensure any available credits are applied to their fullest potential don’t forget to file both forms with your taxes!

$26k Per Employee Tax Credit -

Which Employees Count Towards Eligibility?

Full-time employees (FTE) are counted towards the tax credit and employers need only count seasonal workers as full-time employees and factor them into their wage calculations if they work more than 120 days out of the tax year.

One full-time equivalent employee works 2,080 hours per year, or 40 hours per week. This differs from The Affordable Care Act which considers 30 hours/week employees as being FTEs. Any number of part-timers making up a total annual working time over 2,080 marks them as an FTE too. However, don’t be fooled into thinking that increasing someone’s weekly shift count beyond 40 hours will gain you another valuable FTE – anything more than this won’t get counted!

Guidelines For Tax-Exempt Employers

The Small Business Health Care Tax Credit can be worth up to 35% for tax-exempt employers. The tax credit is nonrefundable, although it can be carried towards either the following or prior year’s taxes if there are no taxable incomes within that time frame as long they don’t exceed what has been paid in both Medicare tax liability and income tax withholding. For more details, be sure to check the IRS guidelines.

Tax-exempt organizations can take advantage of this tax credit by claiming the amount on line 44F of Form 990-T. Though not normally required, filing this form is essential for accessing this financial relief opportunity.


If you’re a small business in search of group health insurance, we can help! Our licensed brokers provide personalized assistance and guidance to find the perfect plan for your company. We have options available nationwide with no hidden middle man fees, making it easy and affordable to get quality healthcare coverage for yourself and your employees. Plus – if you meet certain requirements outlined above then tax credits may be available – so don’t miss out on this opportunity; speak to one of our licensed agents today about how best to take advantage of these savings while also getting great care at an unbeatable price!!

We can help you find out if your company qualifies for The Small Business Health Care Tax Credit and other deductions that could save you money. Apply to get up to $26k per employee in tax credits with RefundsPro

$26k Per Employee Tax Credit -

Get Free Group Quotes Instantly

Compare Plans Side-by-Side