PlansForSmallBusiness

The small business health care tax credit

Up to 50% of the employer's premium share for two years: fewer than 25 full-time equivalents, average wages under the limit ($67,000 for 2025), a SHOP plan, and a uniform contribution. How the phase-out works and who actually gets it.

Prefer to talk? Call (713) 575-9904

Licensed Agents in 31 States · NPN #22052447

The credit is real money for the right business and worthless to most others. The test is arithmetic: full-time equivalents and average wages, both measured the IRS way.

Start with your ZIP and your headcount, not with a plan name

A group quote, an ICHRA costing and the owner’s own plan all start from the same census: who is on payroll, their ages and home counties. Enter your ZIP and a licensed agent runs all four routes for your business, free.

Takes about 30 seconds. No account, and you choose how you are reached.

“I run my own business and my time is valuable. Daniel handled everything — compared the private options, explained what I was actually getting, and had me covered fast. Way better experience than trying to navigate it myself.”
Mark T., client

The four tests

  1. Fewer than 25 full-time equivalents (total hours of all employees divided by 2,080, owners and their family excluded).
  2. Average annual wages under the limit: $67,000 for 2025, indexed; the full credit needs average wages at or under half that and 10 or fewer FTEs.
  3. A plan bought through the SHOP marketplace (or a qualifying arrangement where SHOP is unavailable).
  4. A uniform contribution of at least 50%% of the employee-only premium for each enrolled employee.

How much

Up to 50%% of the employer’s premium contribution (35%% for tax-exempt employers, who can take it as a refund), for two consecutive tax years. The credit shrinks in two ways at once: one reduction as FTEs rise from 10 toward 25, another as average wages rise from half the limit toward the limit. Form 8941 and its instructions carry the worksheet; the credit table on this site shows the approximate percentage at each combination.

Who it fits

Daycares, restaurants, cleaning companies, retail, auto shops, veterinary clinics, small nonprofits: businesses with 5-20 full-time staff paid modestly. Law firms, medical practices, software and advisory firms almost never qualify on wages.

Owners

Owners, partners, more-than-2%% S-corp shareholders and their family members are excluded from the FTE and wage counts and their premiums do not earn the credit. The owner’s own coverage is a separate question; by entity type.