Do you own a small business or run a tax-exempt organization with fewer than 25 full-time equivalent employees?

If  you do, the Small Business Health Care Tax Credit can help you provide insurance to your employees. You may be able to save on your taxes if you paid for at least half of their health insurance premiums.

Maximum Credit

The maximum credit is 50 percent of premiums paid by small business employers. The maximum credit is 35 percent of premiums paid by small tax-exempt employers, such as charities.

Number of Employees

You must have fewer than 25 full-time employees, or a combination of full-time and part-time employees. For example, two half-time employees equal one full-time employee for purposes of the credit.

Average Annual Wages

For 2015, the average annual wages of your employees must have been less than $52,000. The IRS will adjust this amount for inflation each year.

Half the Premiums

You must have paid a uniform percentage, at least 50%, of the cost of premiums for all enrolled employees.

Qualified Health Plan

Generally, you must have purchased a qualified health plan from a Small Business Health Options Program, or SHOP, Marketplace. There are limited exceptions to this requirement.

Two Year Limit

As of 2014, an eligible employer may claim the credit only for two consecutive taxable years.

Tax Forms to Use

Employers use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit. Small businesses employers claim the credit on the annual income tax return. Small tax-exempt employers claim it on Form 990-T, Exempt Organization Business Income Tax Return.

If you are a small business employer and the credit is more than your tax liability for the year, you can carry the unused credit back or forward to other tax years.