Last year, federal lawmakers considered legislation that would have formally written ICHRA into law, rebranded it as a CHOICE Arrangement, and created new tax incentives to encourage employer adoption. While those provisions ultimately did not make it through the Senate version of the One Big Beautiful Bill Act (OBBA), momentum behind ICHRA hasn’t slowed. Instead, several states have begun taking their own approach, passing legislation and tax credits designed to encourage employers to adopt health reimbursement arrangements as an alternative to traditional group health plans. Here’s a look at which states have already acted, what incentives they offer, and which states could be next.
States with ICHRA Tax Credits
Indiana
Indiana was the first state to pass state-level ICHRA tax credits back in 2024.
Who is it for: Small businesses (<50)
HRA type covered: ICHRA or QSEHRA
Incentive: Up to $400 per covered employee in the first year; up to $200 per covered employee in the second year
Statewide cap: $10 million
Read more about Indiana’s ICHRA Tax Credit
Mississippi
Mississippi was the second state to pass state-level tax credits in spring of 2026, applying to the 2026 tax year and beyond.
Who is it for: Small businesses (<50)
HRA type covered: ICHRA only (in lieu of group health insurance)
Incentive: Up to $400 per covered employee in the first year; up to $200 per covered employee in the second year
Statewide cap: $1 million
Read more about Mississippi’s ICHRA Tax Credit
Connecticut
Connecticut just passed ICHRA tax credits in June of 2026, applying to the 2026 tax year and beyond.
Who is it for: Small businesses (<50)
HRA type covered: ICHRA only (in lieu of group health insurance)
Incentive: Up to $1,000 per covered employee per year for the first two years (employer must contribute at least $100/mo)
Statewide cap: $5 million
Read more about Connecticut’s ICHRA Tax Credit
States Considering ICHRA Legislation
*As of June 2026. Information can change quickly.
Georgia
Georgia is currently considering ICHRA tax incentives. They have a pending bill that has passed the House but did not advance in the Senate before the session ended. Any hope for revival comes in 2027.
Who is it for: Small businesses (proposed <50, but smaller cap has been discussed)
HRA type covered: ICHRA only
Incentive: $600 per covered employee per year in years 1-3; $400 per covered employee per year in year 4; $200 per covered employee per year in year 5. Employer must contribute at least $200 per employee per month to be eligible. Employers must also offer PTO, parental leave, and HSA access to qualify.
Statewide cap: $10 million; sunsets in 2030.
Ohio
Ohio is currently considering ICHRA tax incentives. They have a pending bill that has passed the House and is still an active proposal in the Senate.
Who is it for: Small businesses (2-50)
HRA type covered: ICHRA only
Incentive: $400 per covered employee per year; Employer must contribute at least $400 per employee per year.
Statewide cap: None specified yet. Could be set in future discussions.
Arizona
Arizona has introduced multiple bills to study ICHRA tax credits. They will likely not move forward until 2027 or later. The tax credit would be aimed at smaller employers for ICHRA only but no hard numbers have been released yet.
New Hampshire
New Hampshire has an ICHRA tax credit bill in active committee. The credit would be aimed at smaller employers for ICHRA only and would have created a tax credit of $400 in the first year and $200 in the second year.
Wisconsin
Wisconsin was considering an ICHRA tax credit bill that passed Assembly but failed in the Senate. The tax credit would be aimed at smaller employers offering an ICHRA with a tax credit of $400 for the first year and the possibility of a smaller $200 for the second year.
Texas
Texas considered legislation this year that would have created an ICHRA tax credit of $400 per covered employee per year for employers that switch from a group plan and keep contributing at least as much as they did on the group plan.
Why State-Level ICHRA Legislation Matters
The growing wave of state-level ICHRA legislation signals that this model isn’t just a one-off policy experiment. Every time a state creates an ICHRA tax incentive, it sends a clear signal to employers, carriers and lawmakers that ICHRA is here to stay and worth investing in. The momentum here keeps the door open for future federal action by proving the concept at the state level and building a track record of uptake amongst employers. It’s also a rare area of bipartisan alignment in an otherwise divided policy landscape.
Keep an eye on our blog for future state and federal HRA developments, and if you’re interested in an HRA for your organization, take a look at our HRA page to learn more and get started.