Small Business Tax Credit

What is the small business health care tax credit?

The IRS may offer a tax credit to businesses that:

  • Offer employees a VHC-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 tax credits, your business must submit an eligibility application (205ER-TAX) to Vermont Health Connect, and must also offer a VHC-certified health plan to its employees.

How do I get an eligibility determination from VHC that I can use to claim the tax credit?

In order to claim the tax credit, a small business must take the following steps:

  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. VHC will notify you by mail about your eligibility to offer VHC-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 qualify for?

To estimate the value of the tax credit, employers are encouraged to contact the Internal Revenue Service (IRS).

Each particular employer tax/legal scenario is somewhat unique. For specific tax advice regarding your business, we recommend that you reach out to your tax advisor, the Vermont Department of Taxes, or the IRS.

There are Vermont Health Connect certified insurance brokers throughout the State who can provide in-person or virtual assistance and may charge a fee for small business enrollment in plans certified by Vermont Health Connect.  If you'd like to contact a Vermont Health Connect certified insurance broker, please email ahs.vthealthconnect@vermont.gov to be provided with a referral.