Texas Senate Bill SB1949

Texas 2025 - 89th Regular

• Filed: 3/5/25

Caption

Relating to a refund of sales and use taxes or a credit against the franchise tax for certain small employers who contribute to an individual coverage health reimbursement arrangement.

Impact

This piece of legislation is expected to significantly alter how small employers handle health insurance for their employees. Specifically, those businesses with an average of one to fifty employees who qualify will benefit from the tax refund linked to their contributions to individual coverage HRAs, thus easing their tax burdens. The potential cumulative financial relief could enhance the operational viability of small businesses in Texas, allowing them to better navigate the costs associated with employee health benefits.

Summary

SB1949 proposes to amend the Texas Tax Code by introducing a new tax credit and refund mechanism aimed at small employers who contribute to individual coverage health reimbursement arrangements (HRAs). The bill is structured to incentivize small businesses to adopt these HRAs instead of traditional employer-sponsored health insurance. By doing so, the bill seeks to provide financial relief to small employers while also promoting a more flexible health insurance model for their employees.

Contention

Notable points of contention surrounding SB1949 revolve around its implications for health insurance accessibility and coverage scope. Proponents argue that the bill empowers small employers to provide tailored health insurance solutions for their staff that better meet individual needs. However, critics may express concerns that shifting towards HRAs could undermine comprehensive health insurance coverage and leave some employees inadequately protected, particularly those who may not be able to afford individual insurance policies. The effectiveness of these HRAs compared to traditional insurance models is likely to be a central topic in ongoing discussions surrounding the bill.

Texas Constitutional Statutes Affected

Tax Code

• Chapter 151. Limited Sales, Excise, And Use Tax
  • Section: New Section

• Chapter 171. Franchise Tax
  • Section: New Section