Small Biz Health Care Tax Credits Kick In Now

picture-32While the full implications of the new health care bill will not be felt until 2014, businesses with 25 employees or less can start reaping the tax breaks immediately with a new tax credit to offset insurance premiums.

The IRS will be mailing out postcards to millions of small businesses in the next few weeks with instructions on how to see if they are eligible for the credit.

According to

To get the credit, a business must have fewer than 25 full-time workers or the equivalent (the hours worked by part-timers count), pay an average annual wage of less than $50,000, and cover at least half the cost of health insurance premiums for their workers.

There are a few additional restrictions, including caps on how high qualifying premiums can be, and the credit works on a sliding scale. Businesses with fewer than 10 employees and average wages less than $25,000 can max it out, while larger firms and those with higher payrolls collect a reduced credit.

For 2010 through 2013, the tax credit covers up to 35% of the money a qualifying business spends on its health insurance premiums. In 2014, the top tax credit bumps up to 50%. The credit is available for a maximum of six years: 2010 through 2013 and for any two years after that.