One of the big highlights of reform was that the health insurance bill will provide tax credits for small businesses. These tax credits will help pay for employees’ health insurance bills and provide small businesses a 35 percent tax credit.
The health care legislation established that tax credits would be given to businesses, but didn’t provide any specifics on which small businesses could apply or how much they would be worth. Recently, the Internal Revenue Service has issued a list of rules and qualifications for small businesses that could receive tax credits for offering employees health insurance.
Small businesses with less than 25 employees and also pay their employees an average salary of less than $50,000 are eligible for the tax credits. However, according to The Washington Post, the tax credit will become smaller when small businesses have more workers and have larger salaries. So only businesses that have 10 full-time workers that pay less than $25,000 on average to each employee will receive the full 35 percent tax credit. Otherwise bigger companies or companies that pay employees more will not get such a large tax credit.
Small businesses that receive the tax credit have to pay at least 50 percent of employees’ premiums. They can also use the tax credit to pay for dental, vision or other insurance benefits.
The small business tax credits could provide help to four million small businesses; however, the credits not be granted until businesses file taxes in 2011.
It is great that small businesses will be receiving help to provide health insurance benefits but many experts are unclear how much these tax credits will help.