An Act to amend 71.05 (6) (a) 15., 71.21 (4) (a), 71.26 (2) (a) 4., 71.34 (1k) (g) and 71.45 (2) (a) 10.; to create 71.07 (4y), 71.10 (4) (em), 71.28 (4y), 71.30 (3) (am), 71.47 (4y) and 71.49 (1) (am) of the statutes; Relating to: tax credit for small businesses offering individual coverage health reimbursement arrangements. (FE)
Summary
AB915 creates a new Wisconsin income and franchise tax credit for small businesses that offer individual coverage health reimbursement arrangements, or individual coverage HRAs, to their employees. The credit is available for taxable years beginning after December 31, 2025, and equals $400 per covered employee. To qualify, a business must employ at least one and no more than 50 employees and must contribute at least $400 per covered employee to the HRA during the taxable year.
The bill defines the HRA by reference to federal rules and requires the arrangement to meet federal conditions governing individual coverage HRAs. Under those federal rules, employees generally must be enrolled in individual health insurance coverage or Medicare, and employees must be given an opportunity to opt out. The bill applies the credit across Wisconsin’s individual income tax, corporate income and franchise tax, and insurance-related tax provisions by creating parallel credit sections and corresponding pass-through and administrative provisions.
Impact
AB915 would amend multiple sections of Wisconsin tax law to add a new business tax incentive tied to employer-sponsored health benefits. It creates new credit provisions for pass-through entities and corporations, and it adjusts related income-addition and administrative statutes so the credit can be claimed or passed through consistently under the state’s tax structure. The practical effect is to reduce state tax liability for eligible small employers that fund individual coverage HRAs, while leaving the credit capped at the amount of tax otherwise due.
Sentiment
The bill appears to have been broadly supported in the Assembly, where it passed 97-0. That vote suggests strong bipartisan or near-unanimous agreement on the policy goal of encouraging small employers to offer health coverage support through HRAs. However, the bill ultimately did not become law, as it failed to concur pursuant to Senate Joint Resolution 1, indicating that final legislative agreement was not reached.
Contention
The main policy question is whether a state tax credit is an appropriate and effective way to encourage small businesses to offer individual coverage HRAs. Potential areas of concern include the fiscal cost to the state, the administrative complexity of verifying eligibility and pass-through treatment, and whether the benefit would primarily help small employers already inclined to offer health benefits. Because the bill ties eligibility to federal HRA requirements and limits the credit to employers with 50 or fewer employees, any debate likely centered on targeting, compliance, and budget impact rather than on the general concept of supporting employer health coverage.