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Bill

SB 896

Relating to: tax credit for small businesses offering individual coverage health reimbursement arrangements. (FE)

2025-2026 Regular Session Introduced by Mary Felzkowski and 1 co-sponsor

Wisconsin bill creates state tax credit for small businesses offering individual coverage health reimbursement arrangements to employees, failed passage in 2026 session.

Failed to pass pursuant to Senate Joint Resolution 1
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WeVote Research Nonpartisan
Bill Summary · SB 896

Legislative bill overview

SB 896 would create a state tax credit for small businesses that offer individual coverage health reimbursement arrangements (ICHRAs) to their employees. ICHRAs allow employers to reimburse workers for health insurance premiums and out-of-pocket costs through tax-advantaged accounts. The bill aims to incentivize small businesses to adopt this alternative health benefit approach.

Why is this important

Small businesses often struggle with the cost and complexity of offering traditional group health insurance. This tax credit could reduce the financial barrier to offering health benefits, potentially improving employee access to health insurance while giving businesses more flexibility in how they structure compensation. However, the actual enrollment impact depends on the credit's size and whether it outweighs administrative burden.

Potential points of contention

  • Cost to state budget: The fiscal estimate (received Feb 2026) would clarify the tax revenue impact; expanding tax credits requires either spending cuts elsewhere or revenue increases
  • ICHRA effectiveness: Questions exist about whether ICHRAs provide equivalent coverage to traditional group plans, and whether employees receive adequate reimbursement to purchase meaningful insurance
  • Equity concerns: Tax credits primarily benefit higher-wage workers and established businesses; sole proprietors and very small employers may still find the arrangement impractical

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

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