Tax Credits for Small Groups

Under a provision of the Patient Protection and Affordable Care Act (PPACA) the IRS has provided small groups with a tax credit to enable them to maintain health insurance coverage or provide them with the benefit of providing health insurance coverage for their employees. It aims to provide assistance for approximately 4 million small businesses under the new rulings.

Important Updates on Federal Health Care Reform

This tax credit can be significant for a qualifying small group. In 2010, the maximum credit is 35% of employer-paid premiums; for tax-exempt organizations, the maximum is 25% of employer-paid premiums. In 2014, the maximum increases to 50% of employer-paid premiums; for tax-exempt organizations, it increases to 35% of employer-paid premiums. In order to qualify for the credit, the employer must not employ more than 25 employees and the average annual compensation of those employees must not exceed $40,000.