What is a Small Business Tax Credit?

A Small Business Tax Credit is a tax credit designed for small businesses to help offset a portion of their cost of offering health insurance to their employees. The tax credit may cover up to 50% of an employer’s costs or (up to 35% for qualifying non-profits). The Small Business Tax Credit will be available for two consecutive years. Businesses will receive the tax credit when they file their income taxes. Small businesses that contribute to the cost of their employees’ premiums may be eligible for a tax credit of up to 50% of the amount they pay (35% for non-profits).

To be eligible, a Colorado employer must:

• Have fewer than 25 full-time equivalent employees (FTEs)
• Have an average employee wage of less than $53,000 a year (as of tax year 2017)
• Pay a minimum of 50% of the premium cost for single coverage for each employee (uniformity rules apply)

Note: The credit is determined on a sliding scale based on the number of FTEs and the average annual wages.

To estimate whether or not you may be eligible for a tax credit, you can use our Small Business Tax Credit Calculator.

For more information, visit the IRS website.