This bill establishes a new health reimbursement arrangement (HRA) tax credit program aimed at supporting small employers who opt for HRAs instead of traditional employer-sponsored health insurance plans. The program allows qualified taxpayers—defined as employers with fewer than 50 employees—to claim a tax credit of up to $300 per covered employee per year for two consecutive years, provided they meet specific eligibility criteria. These criteria include not having contributed to an employer-sponsored group health insurance plan for the covered employee in the previous three years and ensuring that the contribution to the HRA exceeds the previous year's amount. The total amount of tax credits awarded under this program is capped at $2.5 million per state fiscal year, and the credits can be applied against the Business Profits Tax (BPT) and Business Enterprise Tax (BET).

Additionally, the bill appropriates $40,000 to the Department of Revenue Administration for improvements to its information management system to facilitate the implementation of this tax credit program. The new legal language includes the establishment of Chapter 77-H in the RSA, which outlines the definitions, eligibility criteria, and application process for the tax credit. It also amends existing tax laws to incorporate the new HRA tax credit provisions. The act is set to take effect on July 1, 2026, and will apply to taxable periods ending on or after December 31, 2027.

Statutes affected:
Introduced: 77-A:5
As Amended by the Senate: 77-A:5
SB635 text: 77-A:5