Since 2010 the small employer health insurance tax credit (Code Section 45R) has been available. For tax years 2010 through 2013, businesses that pay more than half the cost of health insurance under a qualifying plan and have 10 or fewer full-time equivalent employees (FTE) who average $25,000 or less in wages can receive up to 35 percent of their qualified premiums as a general business credit. The credit phases out at 6 2/3 percent for each employee over 10 and 4 percent for each $1,000 of averagewages received over $25,000.It is completely phased out at 25 FTE or $50,000 in average wages or any combination of reductions that add up to 100 percent reduction. For example, with 19 employees and $35,000 average wages the reduction is (19 - 10) multiplied by 6 2/3 percent = 60percent reduction and [($35,000 -$25,000)/$ 1,000] multiplied by 4 = 40 percent reduction for a total reduction of 100 percent of the tax credit which leaves zero credit to the employer.
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