HB341: HB341 Income tax; certain employers that offer individual coverage health reimbursement arrangements to employees; create tax credit

Currently Georgia law has a reserved code section with no active tax credit for employers offering individual coverage health reimbursement arrangements, a type of benefit where an employer sets aside money for employees to buy their own health insurance instead of offering a traditional group plan. This bill fills in that reserved section (O.C.G.A. § 48-7-40.10) to create a new income tax credit for small employers, defined as those with ten or fewer employees, that make monthly contributions of at least $100 per covered employee to such an arrangement. The credit starts at $600 per employee for the first three years a business claims it, drops to $400 in the fourth year, and $200 in the fifth year, with a five-year total limit per employer. Statewide credits are capped at $5 million per year, and employers must apply for preapproval each year by October 1. The credit applies to tax years beginning on or after January 1, 2026, and the whole provision expires December 31, 2031.

• Creates a new state income tax credit for employers with ten or fewer employees that contribute at least $100 per month per employee to an individual coverage health reimbursement arrangement.
• Sets a declining credit schedule: $600 per employee for the first three years claimed, $400 in year four, and $200 in year five, with a five-year maximum per employer.
• Requires the employer's arrangement contribution to equal or exceed what it paid for any group health plan for that employee the previous year.
• Caps total statewide credits claimed under this provision at $5 million per year and requires the Department of Revenue to review applications in the order received.
• Requires employers to apply for preapproval by October 1 each year and directs the department to issue preapproval certificates by November 1.
• Sets the credit to expire automatically on December 31, 2031, reverting the code section to reserved status.

Small Georgia businesses with ten or fewer employees that offer or are considering individual coverage health reimbursement arrangements, their employees who are Georgia residents receiving the benefit, and the Georgia Department of Revenue, which will review applications and issue preapproval certificates.

Small employers that shift from traditional group health plans to individual coverage arrangements could receive a state tax credit worth up to $600 per employee annually, potentially making this benefit option more financially attractive, though the $5 million annual statewide cap means not every applicant may receive funding.

• Section 1 defines 'qualified taxpayer' as an employer with ten or fewer employees offering an individual coverage health reimbursement arrangement.
• Section 1 requires a minimum monthly contribution of $100 per covered employee and requires that contribution to match or exceed prior-year group plan spending for that employee.
• Section 1 sets the credit amount on a declining scale over five years: $600, $600, $600, $400, then $200 per employee, with no credit allowed after five years for any employer.
• Section 1 caps total annual credits statewide at $5 million and establishes a preapproval application process due October 1 with certificates issued by November 1.
• Section 1 bars credits from exceeding a taxpayer's income tax liability and prohibits carrying unused credit to other tax years.
• Section 1 sunsets the entire credit provision on December 31, 2031, reserving the code section afterward.
• Section 2 sets the effective date as July 1, 2025, applicable to tax years beginning on or after January 1, 2026.

1. 2025-03-06House Withdrawn, Recommitted (House)
2. 2025-03-06House Committee Favorably Reported By Substitute (House)
3. 2025-03-04House Withdrawn, Recommitted (House)
4. 2025-03-03House Committee Favorably Reported By Substitute (House)
5. 2025-02-11House Second Readers (House)
6. 2025-02-10House First Readers (House)
7. 2025-02-06House Hopper (House)

• Mark Newton (R, HD-127)Primary sponsor
• Bruce Williamson (R, HD-112)
• Eddie Lumsden (R, HD-012)
• Trey Kelley (R, HD-016)
• Darlene Taylor (R, HD-173)
• Kasey Carpenter (R, HD-004)

• small business taxes
• health insurance
• income tax credits
• employer health benefits