The new health reform law gives a tax credit to certain small employers that provide health care coverage to their employees, effective with tax years beginning in 2010. 

The small business tax credit is one of the first provisions in the law to take effect and was designed specifically to assist small employers who pay at least half the cost of single coverage for their employees in 2010. The IRS estimates that more than 4 million small businesses and tax-exempt organizations nationwide are eligible for the credit.

For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers (those with 10 or fewer full-time equivalent employees that pay annual average wages of $25,000 or less) or 25 percent of premiums paid by eligible tax-exempt employers. The credit is completely phased out for employers that have 25 full-time employees or more or that pay average wages of $50,000 per year or more.

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