Taxable or Not: Employer-sponsored Health Insurance

Providing health insurance to your employees supports their wellbeing and carries tax implications that can benefit your business. Health insurance for employees is a tax-deductible business expense, and small businesses may qualify for tax credits under the Affordable Care Act (ACA).

Main Points to Understand

• Health insurance premiums are considered a business expense, hence they are tax-deductible.
• Most health insurance, including medical, dental, and vision, could be considered business expenses.
• Premiums and other medical expenses can only be deducted if they exceed 7.5% of your Adjusted Gross Income.
• Tax credit programs for small businesses are available through the Small Business Healthcare Tax Credit and American Rescue Plan.