DES MOINES, Iowa (AP) — An Iowa Senate panel approved a bill Tuesday that would give a new income tax break to small businesses if they cover part of their employees’ health insurance.
The bill, Senate File 412, passed a Senate Ways and Means subcommittee with bipartisan support and now moves to the full committee. It’s an incentive for small businesses to provide health insurance coverage for their employees.
Democratic Sen. Matt McCoy, of Des Moines, estimates more than 73,000 businesses could benefit.
“We want to ensure we give small business every chance we can to insure employees in the state,” he said.
Under the Patient Protection and Affordable Care Act (PPACA), a small business that employs 25 or fewer people and chooses to cover 50 percent of their employees’ health insurance costs gets a federal income tax break.
If the bill passes, these businesses would get an additional state income tax break, worth a quarter of their federal savings.
For instance, a business that spends $50,000 a year providing health insurance for its employees would get $17,500 back from the federal break, 35 percent of the amount spent. They’d also get an additional $4,375 back from the state break, 25 percent of the federal figure.
Nonprofit businesses also would qualify for the state tax break.
McCoy said he expects the bill to garner bipartisan support in both the Senate and the House.