May 17, 2010

IRS Notice 2010-44: Details on New Small Business Health Care Tax Credit

The Internal Revenue Service (IRS) added an Internal Revenue Code that offers credit for eligible small employers and tax exempt non-profit organizations. The small business tax credit is limited to organizations with 25 or fewer full-time employees (FTEs) who have an average wage of $50,000 or less; the organization must also cover at least 50% of the cost of employee health care coverage. The credit phases out gradually for organizations with average wages between $25,000 and $50,000; and for firms with the equivalent of between 10 and 25 FTEs. Dental, vision, and other limited-scope coverage also qualifies for federal tax credit if the employer pays 50% of the premium.