About the Small Business Health Care Tax Credit

Maryland small businesses and nonprofit organizations that provide health insurance coverage to their employees through Maryland Health Connection may qualify for a health care tax credit from the IRS to help pay for employee coverage.

Eligibility for the Small Business Health Care Tax Credit is determined by the Internal Revenue Services.

See if you qualify.

Who is eligible for the health care tax credit?

Maryland small businesses and tax-exempt organizations may qualify for the Small Business Health Care Tax Credit if they:

• Buy group health insurance coverage through Maryland Health Connection.
• Have fewer than 25 full-time equivalent (FTE) employees (You could still qualify with 25 or more employees, if some are part-time. Total FTEs don’t include the owner or owner’s spouse or family members.).

Calculate FTE

• Pay an average annual salary of less than $65,000 (adjusted for inflation) (This average excludes wages for owner and owner’s spouse or family members.).
• Contribute at least 50 percent toward employee-only health insurance premiums (35% for tax exempt/nonprofit organizations) (Amounts paid toward dependent coverage, if offered, also may be included in this total.).

How much is the tax credit?

The tax credit is highest for employers with 10 or fewer full-time equivalent employees paying an average annual wage of $30,000 (adjusted for inflation) or less. The smaller the business, the bigger the credit.

Small businesses may receive a tax credit of up to 50 percent of insurance premium expenses. Nonprofit or tax-exempt organizations may receive a tax credit of up to 35 percent of insurance premium expenses.

Estimate your tax credit.