Good Business Sense: The Small Business Health Care Tax Credit In the Affordable Care Act

Small Business Majority
Wednesday, May 9, 2012

Congress included in the Affordable Care Act a significant new tax credit for small business owners who provide their workers with health insurance. Under this new tax credit, businesses that have fewer than 25 full-time workers and average wages of less than $50,000 are now eligible to receive a tax credit of up to 35% of the cost of the health insurance that they provide for their workers.

To understand the reach of this new small business healthcare tax credit, Small Business Majority and Families USA commissioned The Lewin Group to develop estimates of the number of small businesses that are eligible for this new tax break in tax year 2011 and how many workers would potentially benefit as a result.

Key Findings

More than 3.2 million small businesses (70.1 percent of businesses with fewer than 25 workers) are eligible for tax credits to help with the cost of health insurance coverage for their workers for the 2011 tax year.

More than two in five (40.3 percent of) small businesses eligible for a tax credit are eligible to receive the maximum tax credit when they file their 2011 taxes. 

Nearly 19.3 million Americans are employed by a small business that is eligible for a tax credit for 2011.

The total value of tax credits available to eligible small businesses for 2011 is more than $15.4 billion, an average of $800 per worker.

Press Release