Congressman Joe Baca (D-Rialto) said today that newly announced guidance from the IRS is good news for the over 500,000 small businesses in the state of California which will qualify for significant tax credits under health insurance reform. The Affordable Care Act is providing tax credits, effective beginning in tax year 2010, for millions of American small businesses to help them offer health insurance coverage to their employees -- if they choose to do so.
"The recently enacted health reform legislation includes the biggest health care tax cut in history," said Rep. Baca. "It is important for small businesses n the Inland Empire to know this tax relief is out there, so they can begin to take advantage of it immediately."
This week, the IRS announced a number of details of how the tax credit works, including:
* that the new tax credit will not be reduced by a state health care tax credit or subsidy (except in limited circumstances to prevent abuse of the credit);
* that small businesses can receive the credit not only for traditional health insurance coverage but also for add-on dental, vision, and other limited-scope coverage; and
* detailed guidance on how a small business can determine whether it is eligible and how large a credit it will receive.
The health reform tax credit is available to small businesses with 25 or fewer employees and an average wage of $50,000 or less that provide health insurance for their employees. Companies with 10 or fewer employees and an average wage of $25,000 or less get the maximum credit--35% of what the employer is paying for employee insurance coverage. The maximum credit rises to 50% in 2014.
"This announcement from the IRS is great news for the 500,000 small businesses in California, which under health reform can get tax credits to cover 35% of their premium costs this year, and 50% beginning in 2014," said Rep. Baca. "Affordable health coverage for small businesses will continue to be a top priority for Congress and the Obama administration. We will remain vigilant to ensure healthcare reform is working for the small business community."
For more information on the IRS guidance issued this week, visit http://www.whitehouse.gov/sites/default/files/rss_viewer/health_reform_small_business_guidance.pdf.