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How Much is Your Small Business Health Care Tax Credit Worth?

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How Much is Your Small Business Health Care Tax Credit Worth?

By Meredith K. Olafson, SBA Official
Published: April 23, 2014 Updated: April 23, 2014

Editor’s Note: This blog is from and was published on April 23, 2014.

When you buy health coverage for your employees through the Small Business Health Options Program (SHOP) Marketplace, you may qualify for a tax credit worth up to 50% of your premium contributions.

Our new SHOP Tax Credit Estimator can tell you what that credit might be worth to your business.

Here are some key things you should know about the tax credit and applying for SHOP:

  • Employers with fewer than 25 full-time equivalent employees may be eligible for the Small Business Health Care Tax Credit, worth up to 50% of employer premiums contributions, if their employees make an average of $50,000 a year or less.
  • The tax credit will be available to eligible employers for two consecutive taxable years.
  • The tax credit may be available to eligible tax-exempt employers who could receive up to 35% of employer premium contributions, and can access the credit as a refund.
  • Generally, the Small Business Health Care Tax Credit is available for eligible employers purchasing SHOP health plans.
  • To enroll in a SHOP plan in most states, you’ll use an agent, broker, or insurance company. You’ll also need to complete a SHOP eligibility application.
  • Visit for the most up to date information and guidance on claiming this tax credit.
  • Even if you’re a small employer who does not qualify for a small business tax credit, you may still purchase coverage through SHOP.

Apply for SHOP coverage any time, all year

SHOP is open to employers with 50 or fewer full-time-equivalent employees (FTEs) and enrollment is open year- round.

A new SHOP Full-Time Equivalent Calculator can help you find out if your business meets the definition of a small business for SHOP based on the number of employees. If your state runs its own SHOP, visit your state Marketplace for information on how to calculate FTEs.

Choose your state and we’ll help you get started. If you have questions about the SHOP Marketplace call 1-800-706-7893 (TTY: 1-800-706-7915), Monday through Friday, 9 a.m. to 7 p.m. ET. Agents and brokers may also use this number.




About the Author:

Meredith K. Olafson

SBA Official

Meredith K. Olafson is Senior Policy Advisor for the U.S. Small Business Administration where she oversees the agency's education and outreach efforts around health care and the Affordable Care Act.


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Thanks for your share of the tax credit. Tax credits will be available to eligible employers in two consecutive taxable years this problem has not been out much, you can share more deeply?
Thanks for your sharing We have applied this for us
thank you for good ideas i will apply it In my business company
This is really a useful article. I love to read it.
Interesting. I just forwarded this on to my brother because he owns a small business that would qualify for the credit, and I'm sure he's never heard of this. Is this something that came about from the Affordable Care Act, or was it already available before?
In Spain we do not have that kind of support for "small businesses". And if there is, there is only little information without problems, I hope that in the future it such state aid and discounts
Interesting facts revealed about Health Care Tax Credit. Hope employees gets benefitted through SHOP & makes their future secure.
I don't understand this qutes: "Employers with fewer than 25 full-time equivalent employees may be eligible for the Small Business Health Care Tax Credit, worth up to 50% of employer premiums contributions" Someone can explain it?
The Small Business Health Care Tax Credit helps small employers afford the cost of providing health care coverage for their employees and is specifically targeted for those employers with low- and moderate-income workers. To be eligible to receive the credit, you must have fewer than 25 full-time equivalent employees (FTEs), pay average annual wages below $50,000, and contribute 50% or more toward your employees’ self-only premiums. If you meet these criteria, you may qualify for a small business tax credit ( of up to 35% (25% for tax-exempt employers) for tax years 2010 through 2013. Businesses that have already filed and later find that they qualified in 2013 or an earlier year can still claim the credit by filing an amended return. In 2014, the tax credit goes up to 50% (35% for tax-exempt) and is available to qualified small employers that buy coverage for their employees in the Health Insurance Marketplace for small employers known as Small Business Health Options Program (SHOP) ( Use the Small Business Tax Credit Calculator ( referenced in this blog to see if your firm may qualify, and if it does, how much the credit could be worth to you. For more information, refer to these Q&As from IRS:


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