The Patient Protection and Affordable Care Act (PPACA) contains some of the most dramatic healthcare reform in the history of the United States. Many provisions have income tax effects which will be phased in over the next few years. Here are a list of provisions enacted in this tax year, and will be enacted in the coming years.

2010
Small business tax credit: A temporary small business tax credit is available for some firms who provide qualified health coverage. However, the credit puts small business owners through a series of complicated tests to determine the actual amount of the credit. (1) Very few small firms will receive the full credit (only firms with 10 employees or less). For firms with 11-25 employees, the credit is reduced per employee. Firms with more than 25 employees get NO credit. (2) Only firms who pay their workers an average of $25,000 or less are eligible for the full credit. The credit is reduced as the average wage goes up, stopping when it reaches $50,000. (3) Only firms covering 50% or more of insurance costs will be eligible. (4) The credit is only available for a maximum of six years. There are additional provisions for start-up firms beginning business after the enactment of this law.

Children may stay on their parents' policies until age 26.

Tanning salon tax: A 10% excise tax on indoor tanning services begins July 1.

Economic substance doctrine: The bill alters long-standing judicial doctrine in ways that could reduce tax-planning options and increase litigation.

2011
Brand-name drug tax: Manufacturers and importers of brand-name drugs will pay a tax of $2.5 billion in 2011, $3.0 billion per year for 2012 through 2016, $3.5 billion for 2017, $4.2 billion for 2018, and $2.8 billion for 2019 and thereafter.

HSA & FSA limits: Consumers are prohibited from using HSA and FSA funds to purchase non-prescribed items, including over-the-counter medication (except insulin).

HSA penalty: The penalty for using HSAs for non-qualified purchases increases to 20%.

Federally subsidized long-term care: Employers may voluntarily participate in the CLASS long-term care program. Participating firms' employees will be automatically enrolled and subject to payroll deductions unless they choose to opt out. This program will almost certainly cost the federal government far more than what the payroll deductions will cover. So this entitlement is yet another unfunded liability to add to federal deficits for decades to come.

Cafeteria plan safe harbor rules added: Employers will have to meet minimum contribution requirements to receive protection from nondiscrimination requirements under cafeteria plans.

2012
1099 reporting: Businesses will have to send Form 1099s for every business-to-business transaction of $600 or more - a tremendous new paperwork burden for small business.

W-2 reporting: Employers will be required to report employees' health benefits on W-2s. This is informational only - the amount does not change taxable income.