Employers who purchase health insurance for their employees through Covered California for Small Business may qualify for tax credits, a benefit only available through CCSB. These tax credits are a type of financial help that can help lower the overall cost of providing health insurance. Eligible small businesses can receive up to 50 percent of their premium contributions back, making it more affordable to offer quality health benefits to their employees.

The amount of credit you are eligible to receive works on a sliding scale. The smaller your business, or the lower your annual average wage, or both, the larger your credit will be.
The maximum credit available is:

• 50 percent of premium expenses as a for-profit employer.
• 35 percent of premiums expenses for tax-exempt employers.
• The credit applies to eligible employers for two consecutive taxable years.

Your tax credit will depend on a number of factors such as:

• Number of employees: The business must have less than 25 full-time equivalent employees (FTEs). Owners and immediate family members of the owner are not counted as employees when calculating the tax credit.
• Average wage of employees: The employees must have an average annual wage of less than $65,000 per year. This limit has been adjusted for inflation since 2014.
• Employer-paid premiums: The employer must contribute at least 50 percent of the cost of insurance coverage for each employee.

Small Business Tax Credit Example