To be eligible for the small business health insurance tax credit, a business must have purchased coverage through Covered California for Small Business, which a licensed health insurance agency, such as BenefitsCafe.com, can help you with. To get the maximum federal small business health insurance tax credit, a company must have fewer than 10 employees and the average wages must be less than $27,000 per year. Since the minimum wage in California is $14/hour for a company with 25 or fewer employees, and this amount is greater than $29,000 per year, California small businesses don’t get the full benefit of the tax credit. As the average wages of employees increases, the health insurance tax credit diminishes to zero when average wages exceed $56,000. You can estimate the amount of health insurance tax credit on this guide to SHOP plans. For more information of the Federal Small Business Health Insurance Tax Credit, see page 7 of the Rules for California Small Business Health Insurance.