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Good Business Sense: The New Small Business Health Care Tax Credit in California

Publisher: 
Small Business Majority
Date: 
Wednesday, 9 May, 2012

Congress included in the Affordable Care Act a significant new tax credit for small business owners who provide their workers with health insurance. Under this new tax credit, businesses that have fewer than 25 full-time workers and average wages of less than $50,000 are now eligible to receive a tax credit of up to 35% of the cost of the health insurance that they provide for their workers.

To understand the reach of this new small business healthcare tax credit nationally and in California, Small Business Majority and Families USA commissioned The Lewin Group to develop estimates of the number of small businesses in the state that are eligible for this new tax break in tax year 2011 and how many workers would potentially benefit as a result.

Key Findings

More than 375,000 small businesses in California (70.1 percent of California businesses with fewer than 25 workers) are eligible for tax credits to help with the cost of health coverage for their workers for the 2011 tax year

More than two in five (42.2 percent of) small businesses that are eligible for this tax credit are eligible for the maximum tax credit when they file their 2011 taxes

More than 2.4 million Californians are employed by a small business that is eligible for a tax credit for the 2011 tax year

The total value of the tax credits that are available to eligible small businesses for 2011 is more than $1.8 billion, an average of $752 per worker

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State(s): 
CA