Ad valorem tax; school districts; state-wide base year homestead exemption; provisions
HB 370 creates a Georgia income tax credit for certain small employers that offer individual coverage health reimbursement arrangements (ICHRAs) to employees. A “qualified taxpayer” is an employer with fewer than 50 employees that provides an ICHRA to covered employees who are Georgia residents, and the employer must contribute at least $200 per month per covered employee. The credit is available for taxable years beginning on or after January 1, 2026, and is structured to phase down over time: up to $600 per covered employee in each of the first three years claimed, $400 in the fourth year, and $200 in the fifth year. No employer may claim the credit for more than five total years.
The bill also imposes administrative controls and limits. Employers must apply for preapproval by October 1 of the year before the credit is claimed, and the Department of Revenue must review applications in order received, while giving priority to employers that have already claimed the credit in prior years. The total statewide amount of credits is capped at $5 million per year, and the credit cannot exceed the taxpayer’s income tax liability. Pass-through entities may allocate the credit to members, shareholders, or partners if the entity itself has no income tax liability. The measure sunsets on December 31, 2028, and authorizes the department to adopt rules for implementation.
In terms of state law, HB 370 amends Georgia’s income tax code by adding a new credit provision in Article 2 of Chapter 7 of Title 48. It creates a new incentive for small employers to use ICHRAs as a form of health benefit financing, potentially affecting employer health coverage decisions and state revenue collections. Because the credit is limited, temporary, and subject to preapproval, the fiscal impact is designed to be controlled rather than open-ended.
The available voting history suggests the bill had meaningful support but also notable opposition. It passed the House 96-77, then later passed the Senate by substitute 43-11 after a motion to engross received a narrower 31-24 vote, and the House agreed to the Senate substitute 141-31. That pattern indicates the bill was ultimately enacted with bipartisan support, but not without significant disagreement at earlier stages.
The main point of contention appears to be whether the state should use tax credits to encourage employer adoption of ICHRAs and subsidize private health benefit arrangements. Supporters likely viewed the measure as a targeted way to help small businesses offer health coverage, while opponents may have questioned the cost, the effectiveness of the incentive, or the appropriateness of using state tax policy to steer employer health benefits. The cap, sunset, and preapproval requirements suggest an effort to address those concerns by limiting exposure and allowing later review.
HB 370 adds a new temporary income tax credit to Georgia law for small employers that contribute to individual coverage health reimbursement arrangements for eligible employees. It affects Title 48 by creating a new section governing eligibility, credit amounts, application procedures, pass-through treatment, annual statewide limits, and a sunset date. The bill primarily impacts small employers with fewer than 50 employees, the Department of Revenue, and state income tax collections, while indirectly influencing employer-sponsored health coverage choices.
The bill appears to have received mixed but ultimately favorable consideration. It cleared both chambers, including a relatively close House vote early on and a narrower Senate motion to engross, but later passed the Senate substitute and the House’s agreement to the substitute by wider margins. That suggests the measure was controversial at first, but enough members supported the final version to move it forward. The absence of committee transcript material limits more detailed insight into debate themes.
The likely areas of disagreement were the use of tax credits to subsidize employer health arrangements, the fiscal cost to the state, and whether the incentive would meaningfully expand coverage or simply reward employers already moving toward ICHRAs. Opponents may have been concerned about revenue loss and policy effectiveness, while supporters likely emphasized assistance for small businesses and employee health benefits. The bill’s annual cap, five-year limit, preapproval process, and sunset date appear designed to address those concerns by constraining the program.