Revision: Dec. 4, 2025, 2:13 p.m.
SB 635-FN - AS INTRODUCED
2026 SESSION
26-2214
07/06
SENATE BILL 635-FN
AN ACT establishing a health reimbursement arrangement tax credit program.
SPONSORS: Sen. Ricciardi, Dist 9; Sen. Avard, Dist 12; Sen. McGough, Dist 11; Sen. Watters, Dist 4; Sen. Abbas, Dist 22; Sen. Perkins Kwoka, Dist 21; Rep. Kuttab, Rock. 17; Rep. Mary Murphy, Hills. 27; Rep. Ohm, Hills. 10; Rep. Miles, Hills. 12; Rep. Labrie, Hills. 2
COMMITTEE: Ways and Means
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ANALYSIS
This bill establishes a health reimbursement arrangement tax credit program.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
26-2214
07/08
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty-Six
AN ACT establishing a health reimbursement arrangement tax credit program.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Short Title. This act may be known and cited to as "The Health Reimbursement Tax Credit Program Act."
2 New Chapter; Health Reimbursement Arrangement Tax Credit. Amend RSA by inserting after chapter 77-G the following new chapter:
CHAPTER 77-H
HEALTH REIMBURSEMENT ARRANGEMENT TAX CREDIT
77-H:1 Definitions. As used in this chapter:
I. “Qualified taxpayer” means an employer with more than one employee that is a corporation, a limited liability company, a partnership, or another entity that has any state tax liability under RSA 77-A or RSA 77-E and has adopted a health reimbursement arrangement, as described in Section 9831(d) of the Internal Revenue Code, in lieu of a traditional employer provided health insurance plan.
II. "Qualified contribution” means a reimbursement an employer provides to an employee for eligible medical expenses, including premiums for an individual health insurance plan or a contribution made.
III. “Qualified account” means an individual coverage health reimbursement arrangement established pursuant to 45 C.F.R. 146.123 or a qualified small employer health reimbursement arrangement described in Section 9831(d) of the Internal Revenue Code.
IV. “Covered employee” means an employee for whom a qualified taxpayer makes a qualified contribution.
77-H:2 Eligibility Criteria.
I. A qualified taxpayer by an employer to a qualified account for use in accordance with applicable federal laws and regulations may claim a credit against their state tax liability for qualified contributions, up to $400 in the first year per covered employee, if:
(a) The amount provided toward the health reimbursement arrangement is equal to, or greater than, the level of benefits provided in the previous benefit year; or
(b) The amount the employer contributes toward the health reimbursement arrangement equals the same or exceeds amount contributed per covered individual toward the employer provided health insurance plan during the previous benefit year.
II. The credit under this section shall decrease to $200 per covered employee in the second year.
III. The credit under this section may not exceed $20,000 per qualifying taxpayer in the first year or $10,000 per qualifying taxpayer in the second year.
77-H:3 Health Reimbursement Arrangement Tax Credit.
I. There shall be allowed a health reimbursement arrangement tax credit applied to an eligible business as set forth in RSA 77-H:2 for qualified contributions made during the taxable year, as follows:
(a) To receive the credit provided under this chapter, a qualified taxpayer must claim the credit on the qualified taxpayer’s state tax return or returns in the manner prescribed by the department.
(b) The amount of tax credits granted under this chapter may not exceed $10,000,000 in any taxable year.
(c) The department shall record the time of filing of each return claiming a credit under this chapter and approve the claims if they otherwise qualify for a tax credit under this chapter in the chronological order in which the claims are filed in the state fiscal year.
(d) The department may not approve a claim for a tax credit after the date on which the total credits approved under this section equals the maximum amount allowable in a particular state fiscal year.
(e) The amount of the credit provided by this chapter that a qualified taxpayer uses during a particular taxable year may not exceed the state tax liability of the qualified taxpayer.
(f) If the amount of a credit determined under this chapter for a particular qualified taxpayer and a particular taxable year exceeds the qualified taxpayer's state tax liability for that taxable year, then the qualified taxpayer may carry the excess over to the immediately succeeding taxable years. The credit carryover may not be used for any taxable year that begins more than 3 years after the date on which the donation from which the credit results is made. The amount of the credit carryover from a taxable year shall be reduced to the extent that the carryover is used by the qualified taxpayer to obtain a credit under this chapter for any subsequent taxable year.
(g) A qualified taxpayer is not entitled to a carry back or refund of any unused credit.
II. The commissioner of the department of revenue administration shall propose rules, pursuant to RSA 541-A, relative to implementing the administration of the health reimbursement arrangement tax credit program established under this chapter.
3 New Paragraph; Taxation; Business Profits Tax; Health Reimbursement Arrangement Tax Credit. Amend RSA 77-A:5 by inserting after paragraph XVII the following new paragraph:
XVII-a. There shall be allowed a health reimbursement arrangement tax credit, as established in RSA 77-H, against taxes due under this chapter for any unused portion of credit that has not been applied to the taxes due under RSA 77-E.
4 New Section; Taxation; Business Enterprise Tax; Health Reimbursement Arrangement Tax Credit. Amend RSA 77-E by inserting after section 3-f the following new section:
77-E:3-g Health Reimbursement Arrangement Tax Credit. The health reimbursement arrangement tax credit established under RSA 77-H shall be allowed against taxes due under this chapter.
5 Applicability. Sections 1 through 4 of this act shall apply to taxable periods ending on or after December 31, 2027.
6 Effective Date. This act shall take effect July 1, 2026.
26-2214
Revised 12/4/25
SB 635-FN- FISCAL NOTE
AS INTRODUCED
AN ACT establishing a health reimbursement arrangement tax credit program.
FISCAL IMPACT: This bill does not provide funding.
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Estimated State Impact | ||||||
| FY 2026 | FY 2027 | FY 2028 | FY 2029 | ||
Revenue | $0 | $0 | Indeterminable Decrease | Indeterminable Decrease | ||
Revenue Fund(s) | General Fund and Education Trust Fund | |||||
Expenditures* | $0 | $40,000 | $0 | $0 | ||
Funding Source(s) | General Fund | |||||
Appropriations* | $0 | $0 | $0 | $0 | ||
Funding Source(s) | None | |||||
*Expenditure = Cost of bill *Appropriation = Authorized funding to cover cost of bill | ||||||
METHODOLOGY:
This bill establishes the Health Reimbursement Arrangement tax credit against the Business Enterprise Tax (BET) and the Business Profits Tax (BPT) for qualified taxpayers that adopted a health reimbursement arrangement, as described in Section 9831(d) of the Internal Revenue Code, in lieu of a traditional employer provided health insurance plan. A qualified taxpayer that has not provided employer health insurance coverage to employees within the last five years may claim a credit of up to $400 in the first year per covered employee. This amount decreases to $200 per covered employee in the second year. The total credits granted may not exceed $10,000,000 in any taxable year. The credit is intended to be used first against the BET liability, then any unused credit may be claimed against the BPT. The credit is not cascading, meaning any credit used to reduce the BET liability would not count as a BET credit against the BPT liability. Any unused credits are eligible to be carried forward for 3 years following the year of the expenditures.
The Department of Revenue Administration states the bill would allow taxpayers to claim the credit on their return, with the Department tracking and monitoring the level of credits claimed and rejecting credits when the aggregate is reached. It should be noted the Department is not able to administer the credit in this fashion. For purposes of this fiscal note, the Department assumes the credit would have a separate but streamlined application and award process developed to apply the aggregate limit and effectuate the carry forward provisions. The Department estimates it would need a general fund appropriation of $40,000 to modify the Revenue Information Management System and forms to permit claiming of the credit and managing the credit and carry forwards.
The Department is not able to determine the magnitude of the fiscal impact due to the unpredictability of the credit being claimed and the associated business tax liability of the affected business. The Department states the maximum decrease in general fund and education trust fund revenue would be $10 million each fiscal year. However, if the carryforward provision was utilized, credit could be less in the first year and higher in subsequent years.
AGENCIES CONTACTED:
Department of Revenue Administration