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Small Business Tax Credit

What is the small business health care tax credit?

The Internal Revenue Service (IRS) may offer a tax credit to businesses that:

  • Offer employees a Vermont Health Connect-certified qualified health plan (QHP)
  • Have fewer than 25 full-time equivalent employees
  • Pay average annual wages below $55,000 per full-time employee (FTE)
  • Contribute at least 50% of each employee's premium (employee only)

To get the tax credit, your business must submit an eligibility application (205ER-TAX) to Vermont Health Connect, and must also offer a Vermont Health Connect-certified health plan to its employees.

How do I get an eligibility determination from Vermont Health Connect so my business can claim the tax credit?

To claim the tax credit, a small business must:

  1. Download an eligibility application (205ER-TAX).
  2. Print and fill out the application.
  3. Mail the completed application to the address on the form.
  4. Vermont Health Connect will send you a letter to tell you if your business is eligible to offer Vermont Health Connect-certified small employer coverage.
  5. Follow the IRS instructions for claiming the credit when you file your taxes.

How much of a tax credit will I get?

To estimate the value of the tax credit, contact the Internal Revenue Service (IRS). Each business is different. For tax advice, please contact your tax advisor, the Vermont Department of Taxes, or the IRS.

There are Vermont Health Connect certified insurance brokers throughout the State who can help you in-person or by phone. They may charge a fee for small business enrollment in plans certified by Vermont Health Connect.  For certified insurance broker contact information, email ahs.vthealthconnect@vermont.gov.