Small Business Health Insurance Tax Credit
Overview
The Affordable Care Act provides a tax credit for an eligible small employer (ESE) for non-elective contributions to purchase health insurance for its employees. (Code Sec. 45R)
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Only Available to Eligible Small Employers (ESEs) that provide nonelective health insurance to their employees and:
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Employ 25 or fewer equivalent full-time employees (FTEs)
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With average annual full-time wages (AAEW) of $64,800 (2024) or less
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Pay at least 50% of the Insurance Costs
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Credit Percentage is 50% (35% for non-profits) and is available for only two years.
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Credit (except for non-profits) is claimed on the 1040
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Credit reduced when:
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Number of FTEs exceeds 10 and
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AAEW exceeds $32,400 (2024)
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Related IRC and IRS Citations, Forms & Pubs
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Form 8941 – Credit for Small Employer Health Insurance Premiums
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Instructions for Form 8941
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Benchmark Premiums – Included in the 8941 Instructions
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Form 990-T - Exempt Organization Tax Return
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Form 3800 – General Business Credit
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Instructions for Form 3800, General Business Credit