Carney Announces Tax Credits For Small Businesses
Congressman Chris Carney (PA-10) today announced how small businesses can immediately begin receiving tax credits under the new health insurance law, detailing a provision that will reduce costs for small business owners and enable more hiring. Starting immediately, businesses with fewer than 25 employees and average annual wages of less than $50,000 are eligible for a tax credit of up to 35 percent to cover the cost of health insurance.
"Small business owners will see immediate relief through the new health insurance law -- relief that is critical to the success of our regional economy," Congressman Carney said. "For too long, business owners have had to choose between hiring and health insurance. We must bring the costs down for small businesses."
Small businesses can take advantage of the tax credits immediately as part of the 2010 tax year. The credit works on a sliding scale. Businesses with fewer than 10 employees and average annual wages of less than $25,000 a year can receive the full 35 percent credit. The credit extends -- on a smaller level -- to businesses with fewer than 50 employees and average annual wages of less than $50,000.
Beginning in 2014, the credit increases to 50 percent of health premium costs, further increasing the cost savings for businesses. The credit is available for as many as six years for each business.
To be eligible for a tax credit, the employer must contribute at least 50 percent of the total premium cost.
Other significant changes that will benefit small businesses go into effect in 2014. For instance, insurance companies are currently permitted to charge higher health insurance premiums because of employee health status. As a result, small businesses pay higher rates because they do not have the advantage of large numbers of employees over which to spread the insurance risk.
Beginning in 2014, small businesses will be able to purchase coverage through newly created state-based Health Insurance Exchanges. These Exchanges will give small businesses the opportunity to join a large pool, giving them access to the same quality, affordable coverage that large firms currently enjoy.
Congressman Carney's official web site -- www.carney.house.gov -- has detailed information about the benefits included in the legislation and when they will take effect. He encourages anyone with questions to call our Washington office at 202-225-3731.