WeVote
Log In

Bill

WeVote Research Nonpartisan
Bill Summary · SB 781

Summary of North Carolina Senate Bill 781 (Session 2025)

Title: Health Insurance Premium Tax Credit

Short description: Creates a tax credit for businesses that provide wages to help employees pay health insurance premiums.

Purpose and intent

  • The bill aims to incentivize employers with a physical presence in North Carolina to contribute toward employees’ health insurance premiums by offering a state income tax credit to eligible businesses.

Key provisions and changes

  1. NEW tax credit: § 105-153.13

    • Name: Tax credit for businesses that provide wages for employee health insurance premiums.
    • Eligible business: A business with a physical presence in North Carolina that has eligible expenses.
    • Eligible expenses: Wages paid by an eligible business to a qualifying employee for the payment of an employee’s health insurance premiums.
    • Qualifying employee:
      • Employed for consideration for at least 35 hours per week
      • Wages are subject to withholding under Article 4A of Chapter 105
      • Employed by an eligible business

  2. Credit amount

    • The credit allowed: Up to $400 per qualifying employee.
    • This credit is against the tax imposed by Part 2 of Article 4 (general NC corporate/individual tax structure under the bill’s framework).

  3. Aggregate (cap) limit

    • Total credits allowed across all taxpayers in any one calendar year: $5,000,000.

  4. Application and allocation process

    • Eligible business must apply to the Department of Revenue (DOR) for tentative approval in the tax year the credit is claimed.
    • Applications are accepted on a first-come, first-served basis.
    • Required information: At minimum, evidence of eligible expenses; DOR outlines submission format and required information.
    • DOR review: Tentative approval by January 31 of the year after the application is submitted, if requirements are met.
    • If total requested credits exceed $5,000,000, the available credits are allocated among timely applicants on a first-come, first-served basis, proportionate to amounts otherwise allowed.
    • Once approved and communicated to the applicant, the eligible business can apply the approved credit to its tax liability for the applicable tax year.

  5. Reporting by Department of Revenue

    • Timing: By March 31 of each year.
    • Content: For each county, number of eligible business tax credit applications received, number of applications approved, and the amount of tax credits approved.
    • Availability: Must be posted conspicuously on the DOR website.

  6. Effective date

    • Applies to taxable years beginning on or after January 1, 2026.

Who is affected

  • Eligible businesses with a physical presence in North Carolina that pay wages to employees who use those wages to cover health insurance premiums.
  • Qualifying employees: Employees meeting the 35+ hours/week threshold and whose wages are subject to NC withholding.
  • Department of Revenue: Administers applications, approvals, credit allocations, and annual reporting.

Procedural/timeline aspects

  • Year of operation: Tax credits apply to taxable years starting January 1, 2026 or later.
  • Application window: First-come, first-served; tentative approvals issued by January 31 of the following year after submission.
  • Annual cap: $5 million aggregate across all taxpayers.
  • Post-approval process: Eligible business applies the approved credit to its tax liability for the relevant year.
  • Transparency: Annual public reporting by DOR to the Joint Legislative Committee on Governmental Operations; online publication by DOR.

Potential impact considerations

  • Economic impact: Creates a tax incentive to offset employer-provided health insurance premium costs, potentially encouraging wage-based premium support.
  • Accessibility: The $400 per qualifying employee credit may be more effective for smaller employers or those with higher payroll-related premium costs.
  • Fiscal: The program is capped at $5 million per year, which constrains total credits but provides predictable state revenue impact.
  • Administrative: Introduces a formal application and reporting process to track use and effectiveness.

If you’d like, I can add a side-by-side comparison with existing NC tax credits or provide a plain-languageFAQ for businesses considering this credit.

Compiled from official sources — confirm details with the bill’s official record.

Sign in to ask a question.