IRS issues guidance on small business health care tax credit

A new tax credit for small businesses that purchase health insurance for their employees is just one part of the new Patient Protection and Affordable Care Act (P.L. 111-148). The IRS recently issued guidance on the Small Business Health Care Tax Credit. The credit is available to both for-profit and non-profit entities that employ fewer than 25 employees, pay average annual wages of less than $50,000 and cover at least 50 percent of the cost of health coverage for employees. Eligible employers may be entitled to tax credits of up to 35 percent of their premium costs for providing health insurance to their employees in 2010. On January 1, 2014, the tax credit increases to up to 50 percent for for-profit employers. For more information, contact your tax advisor.