Small Business Health Care Tax Credit: Who Qualifies (and the SHOP Catch)
The Small Business Health Care Tax Credit can help very small employers pay for employee coverage. But the rules are strict, and many small businesses find they can't use it. Before you plan around it, check the requirements.
This guide covers who qualifies, how much the credit is worth, the SHOP requirement, and what to do if it doesn't fit.
Who qualifies
To qualify for the Small Business Health Care Tax Credit, an employer generally must have fewer than 25 full-time-equivalent employees, pay average annual wages below a limit the IRS adjusts each year, pay a uniform share of at least 50% of the premium for each enrolled employee's coverage, and offer coverage through the SHOP Marketplace.
For tax year 2025, the average-wage limit was $67,000 per full-time-equivalent employee. The IRS adjusts that limit each year, so check the current figure with your tax professional.
How much it's worth
The credit is worth up to 50% of the premiums the employer pays (up to 35% for tax-exempt employers), and it's available for only 2 consecutive tax years. It shrinks as a business goes above 10 full-time-equivalent employees and as average wages rise.
Owners don't count
Owners don't count as employees for the credit: sole proprietors, partners, more-than-2% S-corporation shareholders and more-than-5% owners. Neither do their family members. Their hours, wages and premiums are left out.
The SHOP catch
The credit requires coverage through the SHOP Marketplace. SHOP plans aren't offered in every county. You can check what's available for your county on HealthCare.gov.
Can you have a group plan at all?
- Florida: a small employer is a business with 1 to 50 employees.
- Texas: a small employer averaged 2 to 50 employees in the previous calendar year and has at least 2 employees on the first day of the plan year. A new business uses the average number of employees it reasonably expects to have.
- Both states: a small-group plan generally needs at least one employee on payroll who isn't the owner or the owner's spouse.
Small-group plans are sold all year. From Nov 15 to Dec 15, carriers must accept small groups that miss their participation or contribution minimums, with coverage generally starting Jan 1. See our guide to the Nov 15 – Dec 15 small-group window.
If the credit doesn't fit
- A regular small-group plan may still be worth it without the credit. See our Florida small business group health insurance guide.
- QSEHRA: for employers with fewer than 50 full-time-equivalent employees that don't offer a group plan. Reimbursements are capped by the IRS.
- CHOICE Arrangement (formerly ICHRA): for any size employer, with no federal dollar cap. Written notice is generally due 90 days before the plan year.
Our QSEHRA vs. CHOICE vs. group plan comparison walks through the options.
How Health Services Pro helps
Health Services Pro is a licensed, independent agency in Sunrise, Florida, licensed in 30+ states, including Florida and Texas. We work with 50+ carriers and have Spanish-speaking agents. Working with a licensed broker generally costs nothing extra, because brokers are typically paid by the carriers. We help with coverage, not taxes, so confirm the credit with your tax professional. See our small business page.
Frequently asked questions
How many employees can I have and still get the credit? An employer generally must have fewer than 25 full-time-equivalent employees. The credit shrinks above 10 full-time-equivalent employees.
How much is the credit? Up to 50% of the premiums the employer pays (up to 35% for tax-exempt employers).
How long can I claim it? Only for 2 consecutive tax years.
Do I count myself as an employee? No. Owners don't count as employees for the credit, and neither do their family members.
Do I have to use SHOP? Yes. The credit requires offering coverage through the SHOP Marketplace, and SHOP plans aren't offered in every county. You can check your county on HealthCare.gov.
Get your group quote
Want to see your options? Request a group quote for Florida or for Texas, or call (954) 736-0885.