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Small businesses can claim health tax credits

The new health care reform law is designed to help more businesses provide their employees with individual  health insurance. The law works through a combination of tax breaks and cost-reduction strategies. One provision aimed at small businesses â?? those with 25 or fewer employees â?? kicks in this year. Many of those businesses will be able to claim tax credits for up to one-third of the cost of their employeesâ?? health care, according to a report released last week.

The report, titled â??A Helping Hand for Small Businesses,â? examined how many employers will benefit from the new credit. It was prepared by Families USA, a national consumer health group, and Small Business Majority, a business advocacy organization.
As many as 450,000 businesses in California will qualify for the tax credits. Of those, around 140,000 will qualify for the maximum credit. These numbers represent around 80 percent of all small businesses in the state.Youâ??ll need to meet three conditions. The business must have fewer than 25 full-time-equivalent employees not including the owner, pay average annual wages below $50,000 per employee, and contribute at least 50 percent of each employeeâ??s premium. To use an interactive calculator for your business.The smallest firms with the lowest wages â?? those that employ 10 or fewer workers who earn an average wage of less than $25,000 â?? are eligible for the full 35 percent tax credit. Other small businesses will receive a portion of the credit based on a sliding scale. Nonprofits are eligible for a 25 percent tax credit. Note: Tax credits canâ??t be larger than a businessâ??s tax liability.Beginning in 2014, small businesses will be able to qualify for a larger tax credit, up to 50 percent. They also will be able to purchase health coverage through a new marketplace called an exchange, designed to offer competitive rates. Also beginning in 2014, insurers wonâ??t be able to hike premiums for a small business based on an employeeâ??s pre-existing condition.

This entry was posted on Tuesday, July 20th, 2010 at 6:42 am and is filed under Individual Health Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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