An incentive mechanism designed to encourage employers, usually small employers, to offer health insurance to their employees. The tax credit enables employers to deduct an amount, usually a percentage of the contribution they make toward their employees’ premiums, from their federal taxes. These tax credits are typically “refundable,” so they are available to organizations with no federal tax liability. The ACA includes a tax credit for small employers that provide health coverage to their employees. The tax credit is available to employers with 25 or fewer employees and average annual wages of less than $50,000.