If you've been following the world of small business health benefits (and if you're reading a StretchDollar blog, you probably have), you know that ICHRA — the Individual Coverage Health Reimbursement Arrangement — has been quietly changing the game for small employers across the country.
The short version: instead of wrangling a one-size-fits-all group health plan for your whole team, an ICHRA lets you set a fixed, tax-free monthly budget per employee, and they go pick the health plan that actually fits their life. You control the cost. They control the choice. No participation requirements. No 100-hour admin nightmare. No pretending the plan you picked works for everyone.
StretchDollar has been championing this model since day one — because we believe small businesses and the people who work for them deserve better tools. And lately? Lawmakers are starting to agree.
Eight states have active ICHRA-related legislation on the books or in progress. Some have already passed their laws. Others are one Senate vote away. A few more are just getting started. But taken together, they paint a pretty clear picture: the era of states actively incentivizing small businesses to offer health benefits is here.
Here's your complete state-by-state breakdown.
Already Law: States That Have Passed ICHRA Tax Credit Legislation
Indiana — The Pioneer
Bill: House Bill 1004
Status: Signed into law. Effective January 1, 2024.
Indiana didn't wait around. It became the first state in the country to pass a tax credit specifically designed to incentivize small businesses to adopt ICHRAs, and it's been leading the charge ever since.
What the bill does: Small employers with fewer than 50 full-time employees can claim a tax credit of up to $400 per covered employee in year one, and $200 per covered employee in year two. To qualify, employers need to contribute at least as much to the ICHRA as they previously contributed to employee health care, or contribute a minimum threshold if they're new to benefits entirely.
The statewide annual cap on credits is $10 million. Which sounds like a ceiling until you realize how many small businesses in Indiana could benefit.
Indiana also happens to have a strong individual insurance marketplace, with multiple carriers competing for business. Employees shopping for plans there have real, competitive options.
Indiana proved this could be done. Every state on this list owes them a thank-you card.
Mississippi — The Newest Member of the Club
Bill: SB2868 / HB343
Status: Signed into law. Effective January 1, 2026.
Mississippi's Senate passed SB2868 by a vote of 49-0 in February 2026. You read that right. Not a single "no.” (Or “nay” if you’re feeling fancy.) The companion House bill (HB343) followed, and the Governor signed it into law in early April 2026. It took effect retroactively to January 1, 2026.
What the bill does: Small employers with fewer than 50 employees who offer an ICHRA in lieu of a traditional group health plan can claim a state income tax credit of up to $400 per covered employee in year one and $200 per covered employee in year two. There's a statewide annual cap and a 10-year carry-forward provision for any excess credits.
This one flew almost completely under the radar and you won't find many news stories about it from Mississippi outlets. But that doesn't make it any less significant. A unanimous vote is a signal, and the signal is loud: small businesses matter, and lawmakers are paying attention.
In Progress: Passed at Least One Chamber — Waiting on the Finish Line
Ohio — Sooooo Close
Bill: House Bill 133
Status: Passed the Ohio House unanimously in June 2025. Now pending in the Ohio Senate.
Ohio's HB 133 passed the House without a single "no" vote — unanimous, bipartisan, done. And now it's sitting in the Ohio Senate, where we're watching closely and rooting loudly.
What the bill does: Small employers with 2–50 employees would receive a nonrefundable tax credit of $400 per covered employee in their first year offering an ICHRA. To qualify, employers must contribute at least $400 per employee to the ICHRA annually.
Why does Ohio matter so much? Because Ohio has one of the strongest individual insurance marketplaces in the country. Real competition. Multiple carriers. Meaningful plan options for employees at different price points and with different healthcare needs. When you combine a great marketplace with a financial incentive to adopt ICHRA, you create conditions where small business employees can actually win — with coverage that fits their lives and not just whatever their employer could find in six weeks of phone calls with a broker.
We've been advocates for this bill from the beginning, and we can't wait for the Ohio Senate to get it across the finish line. Check out our CEO, Marshall Darr’s recap from his talk at the OH Capital here.
Georgia — Thinking Long-Term
Bill: HB 341 / HB 370
Status: Passed the Georgia House in 2025. Pending in the Georgia Senate.
Georgia took a notably different approach to its ICHRA tax credit.
What the bill does: This legislation targets the very smallest businesses — those with 10 or fewer employees. Employers must contribute at least $100 per month per employee to their ICHRA. In exchange, they receive a tax credit that's available for up to five years, designed to build a habit rather than just celebrate a one-time switch. The credit starts at $600 per covered employee in year one and declines gradually, down to $200 per covered employee in year five.
The five-year structure is smart. It acknowledges that the hardest part of offering benefits isn't signing up, it's sticking with it year after year when budgets get tight and life gets complicated. Georgia wants employers to build a sustainable benefits program, not just chase a credit.
The smallest of businesses like the two-person shop, the five-person nonprofit, the family-run restaurant — are often the ones who fall through the cracks of the traditional benefits system. Georgia's bill is designed specifically for them. Fun fact, StretchDollar is also designed for them.
Early Stage: Introduced and Working Through the Process
These states have introduced legislation and are in the early innings. No guarantees yet, but the fact that they're in the conversation at all is meaningful. Looking at how the other states have progressed, we have high hopes that these will get moving soon.
Arizona
Bill: HB 2694 Status: Introduced January 22, 2026. In committee.
Arizona introduced its ICHRA tax credit bill in early 2026. The details are still being worked out in committee, but the intent is the same as the other states in this wave: give small businesses a financial incentive to offer health benefits through ICHRA rather than struggling with (or abandoning) traditional group plans.
Connecticut
Bill: HB 5041 Status: Introduced February 5, 2026. In committee.
Connecticut joined the conversation in February 2026 and it's an interesting one to watch. Connecticut tends to lean toward robust benefits legislation, and an ICHRA-focused tax credit would represent a notable endorsement of the defined-contribution model from a state not typically associated with deregulatory health policy moves.
New Hampshire
Bill: SB 635 Status: In committee since November 2025.
New Hampshire has been sitting with its ICHRA tax credit legislation the longest of this early-stage group — it's been in committee since late 2025. "Live free or die" feels like a pretty fitting state motto for a bill about giving employees the freedom to choose their own health coverage. We're hoping 2026 is the year it moves.
Florida — Honorable Mention
Bill: S440 Status: In committee.
As always, Florida is doing something slightly different. Rather than a tax credit, Florida is considering a bill to create a state-run ICHRA marketplace. A dedicated portal where employees of small businesses offering an ICHRA can shop for individual health plans and receive their employer's contribution directly through the platform.
No tax credit attached. But as a piece of infrastructure that makes ICHRA easier to use? That matters. Florida's individual market is large and competitive, and a dedicated ICHRA shopping experience could meaningfully increase adoption.
Didn’t Pass But Not Yet Dead
Texas — Different Structure, Same Spirit
Bill: HB 1709 / SB 673 Status: Didn’t make it through, but we suspect we’ll see it again.
Texas went its own direction — which, honestly, very on-brand. Rather than an income tax credit (Texas doesn't have a state income tax), the Texas ICHRA law would create a sales and use tax refund or franchise tax credit for small businesses that switch from traditional group health insurance to an ICHRA.
What the bill wanted to do: Small businesses with 1–50 employees that transition from a traditional group plan to an ICHRA would be eligible for the credit. The key requirement: the employer must contribute at least as much to the ICHRA as they previously spent on their group plan. It's designed to make sure the credit rewards employers who are actually investing in their employees' coverage — not just using ICHRA as a cost-cutting excuse.
Wisconsin — Assembly Said Yes...
Bill: Assembly Bill 915 / Senate Bill 896 Status: Didn’t pass. But let’s see what happens next session.
What the bill wanted to do: Similar to the Indiana and Mississippi model, Wisconsin's legislation would create a tax credit for small employers who adopt ICHRA for their employees. The credit structure mirrors the now-familiar pattern in this wave of state legislation: meaningful in year one, smaller in year two, designed to get employers over the initial hump of making the switch. It appears that this bill mainly died due to timing, we will probably (fingers crossed!) see it pop up again during next session.
The Big Picture: Why This Matters
Let's zoom out for a second.
A few years ago, ICHRA was a niche idea. Most people didn’t hear about it…could be because a global pandemic was happening at the same time, but who knows. Today, we're watching state after state wake up to what we've known since we started StretchDollar: small businesses need better options for offering health benefits, and ICHRA is the best tool available to give them that.
StretchDollar was started because we kept seeing the same story play out: a small business owner who wanted to take care of their team, couldn't stomach the complexity and cost of traditional group insurance, and ended up offering nothing. That's not a failure of intention, it's a failure of the system.
What's happening at the state level across the country is a recognition that the system needed to change. Indiana started it. Mississippi followed. Ohio and Georgia are one vote away. And Arizona, Connecticut, New Hampshire, and Florida are just getting started. (Let’s not forget that we’ll likely see Texas and Wisconsin again.)
Every one of these bills is, at its core, a statement: the people who work for small businesses deserve health coverage, and small business owners deserve support in providing it.
That's something we've believed for a long time. And it's genuinely exciting to watch the rest of the country catch up.
Ready to See If ICHRA Is Right for Your Business?
Whether you're in a state that's already passed a tax credit, one that's about to, or somewhere that hasn't started the conversation yet — ICHRA works right now, in all 50 states.
You don't need to wait for your state to act. You can set up an ICHRA for your team today, in about 10 minutes, and start offering the kind of flexible, affordable health benefits that your people actually want.
