HB1698
To Amend The Law Concerning The Income Tax Treatment Of Employer Contributions For An Employee's Membership In A Healthcare Sharing Ministry Or Other Medical Cost-sharing Program.
Last Action (May 5, 2025): Died in House Committee at Sine Die adjournment.
Sponsors
AI-Generated Summary
House Bill 1698 amends the Arkansas Income Tax Act of 1929 to provide favorable tax treatment for employer-sponsored membership in healthcare sharing ministries and other medical cost-sharing programs. The bill allows employers to exclude contributions made toward an employee's membership in such programs from their gross income for state income tax purposes. Additionally, the bill permits employers to claim a tax deduction for these contributions when calculating net income. Self-employed individuals are also granted the same rights to exclude these costs from their gross income and claim them as deductions. These provisions are scheduled to take effect for tax years beginning on or after January 1, 2026.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries include employers who offer medical cost-sharing programs as part of their employee benefits package, as they receive a tax deduction for these contributions. Employees also benefit through the exclusion of these employer contributions from their taxable gross income. Additionally, self-employed individuals who participate in healthcare sharing ministries or medical cost-sharing programs benefit by being able to deduct these membership costs from their personal income taxes.
Who Might Suffer?
The primary group negatively impacted is the State of Arkansas, which would experience a reduction in total tax revenue due to the new exclusions and deductions. Additionally, individuals or entities that rely on state-funded public services may be indirectly affected if the resulting decrease in tax collections leads to reduced funding for state programs or services.
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