TX SB1949

Small employers (1-50 employees) who adopt an Individual Coverage Health Reimbursement Arrangement (ICHRA) instead of traditional employer-provided health insurance become eligible for either a sales tax refund or a franchise tax credit

The tax benefit equals $400 multiplied by the average number of covered individuals enrolled in the ICHRA during the year, capped at total taxes paid

Employers must contribute at least the same amount per covered individual they previously contributed to traditional health insurance, or the minimum amount needed to obtain comparable coverage if they had no prior plan

Employers cannot claim both the sales tax refund and the franchise tax credit for the same period; they must choose one option

The provisions take effect January 1, 2026, with refund claims available beginning January 1, 2027