Can a small business in Herriman deduct health insurance premiums?

Yes, eligible small businesses in Herriman can deduct 100% of health insurance premiums paid for employees (and their dependents) as an ordinary business expense. Self-employed individuals may also deduct premiums if they are not eligible for other employer-sponsored coverage.

What is the small employer health care tax credit in Utah?

The small employer health care tax credit is available to businesses with fewer than 25 full-time equivalent employees (FTEs) that pay at least 50% of their employees' health insurance premiums. The credit can be worth up to 50% of the premiums paid for small businesses and up to 35% for tax-exempt organizations.

Which IRS forms are used to claim health insurance deductions?

Small businesses typically claim health insurance deductions on Form 1040, Schedule C (for sole proprietors), Form 1120 (for C corporations), or Form 1120-S (for S corporations). Self-employed individuals use Form 1040, Schedule 1, Line 17 for the self-employed health insurance deduction.

Small Business Health Insurance Tax Deductions in Herriman, Utah

Updated July 2026 · UtahPlanFinder.com — Licensed Health Insurance Producer (NPN #21249133)

Herriman small businesses can deduct 100% of health insurance premiums paid for employees as a business expense.
Self-employed individuals in Utah can deduct their health insurance premiums on Form 1040, Schedule 1, Line 17.
The Small Employer Health Care Tax Credit offers up to a 50% credit for eligible businesses with fewer than 25 employees.
In 2026, 5 carriers offer marketplace plans in Herriman's Rating Area 3, providing options for small group coverage.

Small business owners in Herriman, Utah, can often significantly reduce their taxable income by deducting health insurance premiums. The IRS allows eligible businesses to deduct the full cost of health insurance premiums paid for their employees, and self-employed individuals may also qualify for a deduction. Understanding these tax benefits is crucial for managing your business finances and providing valuable benefits to your workforce in Herriman, a city with a population of 59,346 per U.S. Census Bureau ACS 2024 5-year estimates. This guide outlines the key tax deductions and credits available for small businesses and self-employed individuals seeking health coverage in Utah.

Get Your Free Health Insurance Quote

A licensed agent can compare coverage options for you at no cost.

✓

You're all set!

A licensed agent will reach out shortly.

What Are the Health Insurance Tax Deductions for Small Businesses in Herriman?

For most small businesses in Herriman, health insurance premiums paid for employees are 100% tax-deductible as an ordinary and necessary business expense. This deduction helps offset the cost of providing benefits, making it more feasible for employers to offer health coverage. Eligibility for this deduction generally depends on your business structure: C Corporations: Can deduct premiums as a business expense. S Corporations: Premiums paid for 2% shareholder-employees are deductible by the corporation, but must be included in the shareholder's gross income and then deducted on their personal tax return (Form 1040, Schedule 1). Partnerships: Premiums paid for partners are treated similarly to self-employed individuals; the partnership deducts them, and partners deduct them on their personal tax returns. Sole Proprietorships: Can deduct premiums for themselves, their spouse, and dependents through the self-employed health insurance deduction (discussed below). These deductions can significantly lower your overall tax liability, directly impacting your business's bottom line in Salt Lake County.

The Self-Employed Health Insurance Deduction

If you are self-employed in Herriman and not eligible to participate in an employer-sponsored health plan through another job or your spouse's job, you can deduct 100% of the health insurance premiums you pay for yourself, your spouse, and your dependents. This is an "above-the-line" deduction, meaning it reduces your adjusted gross income (AGI) and is taken on Form 1040, Schedule 1, Line 17, not as an itemized deduction. To qualify, you must have net earnings from self-employment for the year. This deduction is limited to your net earnings from self-employment. For example, if your net self-employment earnings were $50,000 and you paid $8,000 in premiums, you could deduct the full $8,000. If your net earnings were $7,000, you could only deduct $7,000.

Exploring the Small Employer Health Care Tax Credit in Utah

Beyond direct deductions, eligible small businesses in Herriman may also qualify for the Small Employer Health Care Tax Credit. This credit is designed to encourage small employers to provide health insurance to their employees. To be eligible for the credit:

You must have fewer than 25 full-time equivalent employees (FTEs).
Your average employee salary must be less than $60,000 per year (adjusted annually for inflation).
You must pay at least 50% of your employees' health insurance premiums.
You must offer health insurance coverage through a state marketplace, such as HealthCare.gov, or a qualifying small business health options program (SHOP).

The maximum credit is 50% of the employer-paid premiums for small businesses and 35% for tax-exempt organizations. The credit is available for two consecutive tax years. This can be a substantial benefit, potentially reducing your tax liability dollar-for-dollar.

Health Insurance Options for Herriman Small Businesses

Small businesses in Herriman, Utah, have several avenues to secure health insurance for their employees. These include the Small Business Health Options Program (SHOP) marketplace, direct enrollment with carriers, or working with a licensed health insurance producer. Herriman, located in Rating Area 3, which covers Davis, Salt Lake, Summit, Tooele, Wasatch counties, offers a competitive landscape for health insurance. Salt Lake County, with a population of 1,196,523, benefits from a range of healthcare providers and plan options. In 2026, 5 carriers offer marketplace plans in Rating Area 3. These plans are primarily Health Maintenance Organization (HMO) and Exclusive Provider Organization (EPO) network structures, as PPO plans are not available on-exchange in Utah.

Understanding Utah Medicaid for Small Business Owners and Employees

Utah expanded Medicaid in 2020, through Proposition 3. This means that adults with incomes up to 138% of the Federal Poverty Level (FPL) may qualify for Utah Medicaid. For small business owners or their employees in Herriman with lower incomes, this can be a crucial safety net. The program provides comprehensive health coverage with no premiums, ensuring access to necessary medical care. Pregnant women in Utah may qualify for Medicaid with incomes up to 144% FPL, and children through CHIP up to 200% FPL. Enrollment can be completed through Utah's Medicaid portal at medicaid.utah.gov.

Health Insurance Carriers in Herriman

For 2026, small businesses and individuals in Herriman have access to plans from 5 confirmed carriers within Rating Area 3. These carriers offer various HMO and EPO plans through HealthCare.gov, providing options for different coverage needs and budgets. The confirmed carriers offering marketplace plans in Herriman's Rating Area 3 for 2026 are:

BridgeSpan Health Company
Imperial Health Plan of Utah
Regence BlueCross BlueShield of Utah
Select Health
University of Utah Health Plans

When selecting a plan, consider factors like network size, prescription drug coverage, and out-of-pocket costs, in addition to premium prices. Many plans in Herriman provide access to major medical facilities in Salt Lake County, including Holy Cross Hospital - Salt Lake, University of Utah Hospital and Clinics, and Intermountain Medical Center.

Making the Right Choice for Your Small Business

Deciding on the best health insurance and tax strategy for your Herriman small business involves weighing several factors. Consider your budget, the number of employees, average employee salaries, and your business structure. If you have fewer than 25 FTEs and pay at least 50% of premiums: Explore the Small Employer Health Care Tax Credit for significant savings. If you are self-employed and lack other coverage options: Utilize the self-employed health insurance deduction to reduce your AGI. If you have employees with lower incomes: Inform them about Utah Medicaid expansion, which provides coverage up to 138% FPL. Navigating the complexities of health insurance and tax regulations can be challenging. A licensed health insurance producer specializing in small business plans can help you understand your options, compare plans from carriers like Select Health and Regence BlueCross BlueShield of Utah, and ensure you take advantage of all eligible tax benefits. Their services are free, and they can provide personalized guidance tailored to your Herriman business.

Frequently Asked Questions

Can I deduct health savings account (HSA) contributions as a small business owner?

Yes, if you have a high-deductible health plan (HDHP) and an HSA, contributions made by your business to an employee's HSA are tax-deductible for the business. As a self-employed individual, your contributions to your HSA are also deductible on your personal tax return.

What is a Section 105 HRA and how does it relate to small business deductions?

A Section 105 Health Reimbursement Arrangement (HRA) allows small businesses to reimburse employees for medical expenses, including health insurance premiums. These reimbursements are tax-deductible for the employer and tax-free for the employees. This can be a flexible alternative to traditional group health plans, especially for very small businesses.

Do I need to report health insurance benefits on employee W-2s?

Generally, the value of employer-sponsored health insurance coverage is not taxable income to employees and is not reported as wages on Form W-2. However, for S corporation 2% shareholder-employees, the premiums paid on their behalf are included in their W-2 wages and then deducted on their personal tax return.