While many people are waiting to see the impact of the new national healthcare plan on medical coverage, it’s already clear that the bill is giving some healthy tax credits to small businesses. Business formation rates may soon spike as entrepreneurs will likely want to take advantage of these credits.
The Morris Daily Herald reports that SMBs will be eligible for tax credits of up to 35 percent of the insurance premiums’ share that employers pay for their workers. Effective as of 2014, this will increase to up to 50 percent credits. Eligibility requirements set for the credit translate into different savings for different types of companies. For-profit companies can receive up to 35 percent tax credit, while 501(c)3 service nonprofits can receive just 25 percent tax credits.
Moreover, Time reports that microbusinesses stand to benefit more. Only those firms with less than the equivalent of 10 full-time workers paying an average wage of less than $25,000 per year are eligible for full credit. The credit decreases gradually for firms with an average annual wage between $25,000 and $50,000 and with a number of equivalent full-time workers between 10 and 25.
This week, the Internal Revenue Service is sending out information to more than four million small businesses to explain the benefits of the healthcare tax to credit in simplified terms. Business owners might want to check their mail.