The IRS has issued proposed regulations to implement the tax credit available to small employers that provide health coverage to their employees. The proposed regulations incorporate the guidance previously provided in Notice 2010-44 and Notice 2010-82. Generally, employers with 25 or fewer full-time employees, whose employees have average annual wages of less than $50,000 per full-time employee, can receive a tax credit of up to 50% of the premiums paid if they purchase qualified health plans purchased through the Small Business Health Options Program (SHOP.) These tax credits will not be available to employers who purchase coverage outside of the SHOP. The amount of the tax credit phases out for employers with more than ten employees or if the average annual wages for the full-time employees exceed $25,000. The proposed regulations provide guidance on how to determine whether an employer qualifies for the credit and how to calculate the credit.