On Monday, Governor Tate Reeves signed HB 343 into law, making Mississippi the second state (after Indiana) to enact a dedicated tax credit for employers that offer individual coverage health reimbursement arrangements (ICHRAs). The bill passed both chambers with near-unanimous bipartisan support: 119-0 in the state House and 48-2 in the state Senate.
Mississippi's law closely mirrors Indiana's pioneering 2023 legislation, and its passage reflects a broader wave of state-level interest in using tax incentives to accelerate ICHRA adoption. With enhanced ACA premium subsidies now expired and states searching for tools to expand access to affordable coverage, ICHRA tax credits have emerged as one of the few health policy ideas attracting genuine bipartisan support.
What Mississippi's law does
The new law provides a nonrefundable state income tax credit for small employers with fewer than 50 employees who offer an ICHRA.
Here are the key terms:
Credit amount: Up to $400 per covered employee in the first year of offering an ICHRA, and $200 per covered employee in the second year.
Carry-forward: Unused credits can be carried forward for up to 10 years.
Prior-plan benchmark: The year-one credit requires the employer's ICHRA contribution to match or exceed their prior health plan contribution.
Statewide cap: $1 million annually across all participating employers, distributed on a first-come, first-served basis.
At $400 per employee, the cap would be exhausted by roughly 2,500 to 5,000 employees, depending on the mix of year-one and year-two claims.
The modest budget reflects Mississippi's interest in exploring this program at pilot scale.
A few important caveats
Like Indiana's law, the Mississippi statute leaves certain details to be resolved through regulatory guidance. Most notably, the year-one credit references a prior-plan contribution benchmark, but the bill doesn't clearly address how this applies to employers that have never previously offered health benefits.
Indiana's Department of Revenue addressed a version of this issue in its December 2024 implementation guidance. This clarifies that new employers who didn't previously offer benefits qualify for the credit in their first two years of offering an ICHRA. The guidance also established that the credit equals the lesser of the employer's actual ICHRA contribution or the $400/$200 maximum. That means the credit is only as valuable as what the employer actually contributes.
Mississippi's bill similarly directs its Department of Revenue to adopt rules. Guidance comparable to Indiana's actual contribution limitation would create clarity and ensure the credit rewards genuine investment in employee coverage.
How Mississippi compares to other ICHRA incentives
Indiana (enacted 2023) established the template. It has the same $400/$200 per-employee credit structure and sub-50 employee threshold, but with a significantly larger $10 million annual statewide cap. Indiana resolved similar statutory ambiguities regarding first-time benefits programs through post-enactment regulatory guidance. Indiana's law has been the primary reference point for subsequent state bills.
At the federal level, the Custom Health Option and Individual Care Expense Act (“CHOICE Act,” S. 2875 / H.R. 5463) would create a more generous credit of $1,200 per employee in year one and $600 in year two, while also codifying ICHRAs in statute. The bill would also introduce enhancements like the ability for small employers to offer employees a choice between an ICHRA and a traditional small group plan. The House passed packages containing CHOICE provisions in May and December 2025, but the measure has yet to receive committee consideration in the Senate.
Why ICHRA tax credits are gaining momentum now
Enhanced ACA premium subsidies expired at the end of 2025, and Marketplace enrollment fell by about 1.2 million during open enrollment. While meaningful, the drop is far less than the 3-5 million decline many had projected. That relative resilience wasn't an accident: roughly 10 states stepped up with their own subsidies and premium alignment strategies to keep people covered, while states that didn't act saw enrollment drops of 15-22%.
ICHRA tax credits are part of the same bipartisan impulse. With federal action stalled, states are building their own tools to expand access to affordable coverage. As National Council of Insurance Legislators (NCOIL) CEO Will Melofchik told Politico, interest in ICHRA legislation is coming from “a rare red and blue state mix” because “everyone, whether Republican or Democrat, is just looking for solutions to get as many folks covered as possible.”
Where other states stand
Beyond Indiana and Mississippi, a growing number of states have introduced ICHRA tax credit legislation. Here's where things stand as of early April 2026.
Active legislation:
Ohio: HB 133 passed the House unanimously in June 2025 and is awaiting Senate action. Ohio's legislature meets year-round.
Connecticut: Governor Lamont (D) proposed a $1,000 per employee ICHRA tax credit administered through the Access Health CT exchange. The bill, HB 5041, was reported favorably out of committee and was placed on the House calendar on April 7, 2026. Connecticut’s legislative session runs through May 6, 2026.
New Hampshire: SB 635 received a favorable committee report in February 2026 and is pending review by a second committee. The session runs through June 30, 2026.
Arizona: HB 2694 was introduced in January 2026 and remains in committee. The session runs through April 25, 2026.
Did not advance:
Georgia: HB 1110 passed the House with unanimous committee approval but did not advance in the Senate before the session ended.
Wisconsin: AB 915 passed the Assembly unanimously (97-0) in February 2026, but the Senate companion (SB 896) failed to advance before the session ended.
Texas: SB 1949 did not advance during Texas’ 2025 legislative session, and the state does not have a 2026 regular session. Interest remains in reintroducing the bill for consideration when the Texas legislature meets again in 2027.
A national model is on the horizon
NCOIL is scheduled to discuss and potentially adopt a model ICHRA tax credit act at its Spring Meeting in Louisville on April 18, 2026. The model, sponsored by Ohio Representative Meredith Craig, improves on the Indiana and Mississippi legislation by requiring a minimum per-employee contribution directly in the statute, while leaving specific dollar amounts to each state's discretion.
Thatch is sponsoring and attending the NCOIL Spring Meeting and will be advocating for adoption of the model law during the committee session. An NCOIL-approved model act would give the growing list of states considering ICHRA legislation a clean, adaptable starting point that reflects lessons learned from the first two states to act.
Three years ago, no state offered an ICHRA tax credit. Today, two are on the books, four more states and the federal government have active legislation, and a national model law is on the verge of adoption. States where earlier bills stalled are likely to revisit them in upcoming sessions. The policy momentum is real, bipartisan, and accelerating.
