Individual Coverage Health Reimbursement Arrangement (ICHRA) tax credit; authorize.
Summary
House Bill 1667 creates a new Mississippi income tax credit for certain small employers that offer an Individual Coverage Health Reimbursement Arrangement, or ICHRA, instead of a traditional employer-sponsored health insurance plan. To qualify, an employer must have fewer than 50 employees, be subject to Mississippi income tax liability, and provide the ICHRA in lieu of a standard group health plan.
The credit is structured to encourage employers to adopt and continue the arrangement. For the first taxable year an eligible employer offers an ICHRA, the credit may be up to $400 per covered employee if the employer’s contribution meets specified benefit-comparison thresholds. For the second taxable year, the credit may be up to $200 per covered employee. The bill also requires employers claiming the credit to document eligibility, claim the credit on their annual return, and report to the Department of Revenue every three years on whether they continued the ICHRA and what benefits were provided.
Impact
The bill would add a new section to Chapter 7, Title 27 of the Mississippi Code governing income tax credits. It creates a capped state tax expenditure of up to $10 million per fiscal year, administered by the Department of Revenue on a first-come, first-served basis. Credits cannot exceed the employer’s state tax liability, but unused amounts may be carried forward for up to 10 years. The Department of Revenue must also adopt rules to implement and administer the program, and the act takes effect January 1, 2026.
Sentiment
The available voting history shows strong support in the House, where the bill passed 120-0 on February 26, 2025. No committee transcript was provided, so there is no recorded floor or committee debate to indicate opposition or concerns in the available materials. The unanimous vote suggests the measure was broadly viewed favorably by House members.
Contention
The main policy questions raised by the bill’s structure are fiscal cost, administrative oversight, and whether the credit effectively incentivizes employers to switch to or retain ICHRAs. The $10 million annual cap and first-come, first-served approval process may be points of concern for employers who could miss out once the cap is reached. The reporting requirement every three years and documentation obligations also reflect an interest in monitoring whether employers actually maintain the coverage arrangement and whether the state receives the intended policy benefit.