Small Business Tax Credit Gets Little Use

A tax credit established under the Affordable Care Act aimed at small business has gone largely unused. Response to the Small Employer Health Care Insurance Tax Credit, which offers an incentive for small businesses to provide group health coverage, has been underwhelming.

A March 2016 report from the Government Accountability Office (GAO) found that in 2014, about 181,000 employers received the credit. The GAO estimates that between 1.4 million to 4 million employers are eligible for the credit.

The law limits the tax credit to employers with fewer than 25 full-time employees who earn an average wage of less than $50,000. Employers must pay at least half of their employee health insurance premiums and purchase coverage through the ACA online exchange. The maximum credit is 50 percent of premiums.

The GAO found that the credit was too complex for some small businesses. Others were simply unaware.   Source: SHRM  S