Small Business Health Care Tax Credit & SHOP Marketplace Health Insurance

Chances are, if you’re a small business owner who offers health insurance to your employees, you’ve probably heard about the small business health care tax credit. Everyone wants to lower their tax liability, and researching tax credits can help you do that!

However, you have to consider your eligibility, the credit’s availability, and whether the amount you’re entitled to is worth retrieving – or if it’s only a few dollars.

At CSI Accounting & Payroll, we’ve worked with small business taxes for over 50 years. That means we’ve advised thousands of small business owners on tax credits, including addressing these questions about the small business health care tax credit:

• What is the small business health care tax credit? Who is eligible?
• Is the credit still available?
• What is the calculation for the credit?

About the Small Business Health Care Tax Credit

At face value, this tax credit is for small businesses that pay for the health insurance of their employees. However, there are more specific details when determining who’s eligible for the credit, including:

• Small businesses. In this case, that means you have fewer than 25 employees. Smaller businesses also may get higher credits!
• Insurance paid. You must pay at least 50% of premiums for employees, not including their family or dependents.
• SHOP insurance. You must buy your health insurance plans on the Small Business Health Options Program (SHOP) Marketplace, which is a government site.
• Average wage cap. The average wage paid to your employees must be below $56k for 2024. (Find your average wage by adding up all of your employees’ wages and dividing that number by the number of employees.)
• All employees. You must offer the insurance to all of your full time employees.

Tax Credit Availability

Is this credit still available? Yes! We hear this question a lot – here are a few reasons why. 

First of all, we get a lot of questions about this credit in general because it’s fairly well-known.

Plus, there are some credits that expire or are replaced with other credits. People want to know if this one is also on the chopping block.

The final reason is that none of your peers are receiving the credit. You may feel like it’s on its way out the door if nobody is getting it, but it’s just very difficult to qualify. (The two biggest disqualifiers are insurance not coming from the SHOP Marketplace and paying employees too much.)

Calculating the Tax Credit

Let’s say you think you qualify for the credit. To determine whether your credit is worth claiming, you can estimate the value of your credit with this calculator.

Not sure if you qualify or how to determine your credit value? CSI Accounting & Payroll is here to help! As part of our year-round accounting service, we are always available to answer your questions at no additional cost!

Get Help Claiming the Best Tax Credits

Now that you know what the small business health care tax credit is, who is eligible, that the credit is still available, and how to calculate it (or have a monthly accountant help!), are you ready to check out monthly accounting services?

If so, please consider CSI Accounting & Payroll! To see if we can be a good fit for your business, click the button below for a free consultation:

Not ready to talk? That’s okay! First, learn about other credits that you may be eligible for.