Federal Regulatory Guidance and Actions: Small Business Tax Credit

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CAD flagThis is one in a series of NCSL documents offering assistance to states in interpreting and implementing the Affordable Care Act.

Small Business Tax Credit

Title I, Subtitle E, Part II, Section 1421

The new federal health reform law provides a Small Business Tax Credit to businesses for contributing toward their workers’ health premiums, beginning with the 2010 Tax Year. The credit applies to all amounts paid or incurred in taxable years beginning after Dec. 31, 2009.


Guidance/Information - Internal Revenue Service (IRS)

Highlights:  New Guidance on Small Business Health Care Tax Credits  (May 18, 2010)

The Internal Revenue Service posted guidance for small businesses April 1 regarding tax credits for providing health care coverage to their employees. Tax credits were included in the provisions in the Patient Protection and Affordable Care Act, H.R. 3590, and provides a maximum credit of 35 percent of premiums paid in 2010 by eligible small businesses and tax-exempt organizations. The credit increases in 2014 to 50 percent for small businesses but remains the same for tax-exempt organizations. Eligible businesses include those that employ 25 or fewer individuals whose wages are on average below $50,000.

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