Texas lawmakers introduced legislation in March that aims to offer tax relief to small businesses that provide ICHRAs to their employees. Small businesses with between one and 50 employees would qualify for a refund of sales and use taxes or a tax credit against the franchise tax if they adopt an ICHRA and contribute a minimum of $400 per covered employee annually. The refund or credit amount would be calculated based on the number of employees enrolled in the ICHRA during the taxable year, with the credit capped at $400 per employee or the total amount of taxes paid under the sales and use tax system, whichever is less.
3 states pitching ICHRA tax credits
By: Jakob Emerson
Multiple states have introduced legislation in 2025 aimed at offering tax relief to small businesses that provide individual coverage health reimbursement arrangements, or ICHRAs, to their employees. The proposals would incentivize small employers to adopt ICHRAs by offering tax credits or refunds based on their contributions to employee health plans.
Three states pitching ICHRA tax credits:
Georgia lawmakers introduced a bill in March that would provide a tax credit for small businesses that offer ICHRAs to their employees. Qualified taxpayers, defined as employers with ten or fewer employees, could receive a credit for contributions made to ICHRAs for their employees who are Georgia residents. To qualify, the employer would have to contribute at least $100 per month to the ICHRA for each covered employee, and the contribution must be equal to or greater than the employer’s previous contributions to any employer-sponsored health plan for that employee. The credit amount would vary over five years, starting at $600 per covered employee for the first three years, decreasing to $400 in the fourth year, and $200 in the fifth year. The total amount of credits available each year is capped at $5 million.
Texas lawmakers introduced legislation in March that aims to offer tax relief to small businesses that provide ICHRAs to their employees. Small businesses with between one and 50 employees would qualify for a refund of sales and use taxes or a tax credit against the franchise tax if they adopt an ICHRA and contribute a minimum of $400 per covered employee annually. The refund or credit amount would be calculated based on the number of employees enrolled in the ICHRA during the taxable year, with the credit capped at $400 per employee or the total amount of taxes paid under the sales and use tax system, whichever is less.
Ohio lawmakers introduced a bill in February that would offer a tax credit to small businesses that provide employees with ICHRAs. Small businesses with between two and 50 employees would qualify for the credit if they provide an ICHRA to at least some of their employees and contribute a minimum of $400 per worker annually. The credit amount would be determined by multiplying $400 by the number of employees enrolled in an ICHRA during the taxable year.
SOURCE: Beckers
