HB 341: Income tax; certain employers that offer individual coverage health reimbursement arrangements to employees; create tax credit

Georgia law currently has no tax credit for employers who help pay for employees' individually purchased health insurance through an arrangement called an individual coverage health reimbursement arrangement (ICHRA). This bill fills in a previously reserved section of the tax code, O.C.G.A. § 48-7-40.10, to create one. Employers with ten or fewer employees that contribute at least $100 a month per covered employee to an ICHRA, and contribute at least as much as they did the prior year under any employer-sponsored plan, could claim a credit worth up to $600 per employee for the first three years, $400 in the fourth year, and $200 in the fifth year. No employer could claim the credit for more than five years total, and statewide credits are capped at $5 million per year. Employers must apply for preapproval by October 1 each year, with certificates issued by November 1. The credit cannot exceed a taxpayer's tax liability and cannot carry forward or back. The whole program is set to repeal on December 31, 2031, and takes effect July 1, 2025, applying to tax years starting on or after January 1, 2026.

• Creates a new Georgia income tax credit for small employers (ten or fewer employees) that contribute to individual coverage health reimbursement arrangements for their workers.
• Requires employers to contribute at least $100 per month per covered employee and to contribute at least as much as they did under any prior employer-sponsored health plan.
• Sets a declining credit schedule: $600 per employee in years one through three, $400 in year four, and $200 in year five, capped at five years total per employer.
• Caps total statewide credits at $5 million per year and requires employers to apply for preapproval each year before claiming the credit.
• Bars unused credit amounts from carrying forward or backward to other tax years.
• Automatically repeals the entire credit program on December 31, 2031.

Small Georgia employers with ten or fewer employees that offer or are considering individual coverage health reimbursement arrangements, their covered employees who are Georgia residents, and the Georgia Department of Revenue, which will review preapproval applications and administer the credit program.

Small businesses that shift from group health plans to reimbursing employees for individual insurance could recover some costs through this credit, potentially making that health coverage model more financially attractive. The $5 million annual cap and preapproval process mean not every eligible employer is guaranteed a credit each year.

• Section 1 rewrites O.C.G.A. § 48-7-40.10 (previously reserved) to define 'covered employee,' 'individual coverage health reimbursement arrangement,' and 'qualified taxpayer' as an employer with ten or fewer employees.
• Subsection (b) requires employers to contribute at least $100 per month per covered employee and to match or exceed prior-year employer health plan contributions to qualify.
• Subsection (c) sets the credit amounts: $600 per employee for years one to three, $400 in year four, $200 in year five, with a five-year total cap per employer.
• Subsection (d) caps aggregate statewide credits at $5 million per year.
• Subsection (e) requires employers to submit preapproval applications by October 1 each year, with the Department of Revenue issuing approval certificates by November 1 and prioritizing repeat claimants.
• Subsection (f) bars credits from exceeding a taxpayer's tax liability and prohibits carrying unused credit to other tax years.
• Subsection (h) sunsets the entire credit program, repealing it on December 31, 2031.
• 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-12)
• Trey Kelley (R, HD-16)
• Darlene Taylor (R, HD-173)
• Kasey Carpenter (R, HD-4)

• income tax credits
• small business health benefits
• health reimbursement arrangements
• employer health coverage
• Georgia tax code