Health Care Tax Credit For Small Businesses And Non-Profits

On Tuesday, drastic changes were made to our health care system when President Obama signed the health care reform measure into law.  Among those changes are some immediate benefits to small businesses providing health insurance to their employees. Americans for the Arts has the details:

Dear Washington Arts Advocates,

We have been tracking the following for several months, hoping that the outcome we desired would prevail.  With the signing of the health insurance reform bill this morning, one of the very first provisions to be immediately enacted is a tax credit to small businesses to make employee coverage more affordable. Tax credits of up to 35% of premiums will be immediately available to firms (including nonprofit organizations) that choose to offer coverage. Then, beginning in 2014, these small business tax credits will cover 50 percent of premiums.

Americans for the Arts staff participated in many lobbying visits along with staff from Independent Sector relating to this provision; and, many of us e-mailed Congressional leaders, asking them to make sure that nonprofits were included in this incentive. We are all very pleased that it remained in the final legislation.  Below are more details regarding this provision, and we will forward any additional news we see on implementation of the healthcare reform legislation in the weeks and months ahead.


Small employer incentive

The final health care package would provide a tax credit beginning in 2010 through 2013 for businesses and 501(c) organizations with less than 25 employees and average wages below $50,000. During those three years, the bill permits a credit for all eligible small employers that provide insurance for their employees, and beginning in 2014, credits are available to employers purchasing employee coverage through health insurance exchanges. Nonprofits could take a credit in the initial period of 25 percent of the employer contribution and 35 percent in subsequent years, and apply the credit to taxes they withhold from payroll. Employees would still receive full credit for taxes withheld from their pay. For businesses, the credit is 35 percent initially and 50 percent in the proceeding years. The different values of the credit reportedly relate to efforts at cost containment (the nonprofit provision costs $2.1 billion over 10 years) and to reflect the differences in the frequency and likelihood of paying taxes between for-profit and nonprofit employers. [Source: Independent Sector]

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