LEGISLATIVE FISCAL ESTIMATE

SENATE, No. 1769

STATE OF NEW JERSEY

222nd LEGISLATURE

 

DATED: AUGUST 24, 2026

 

 

SUMMARY

 

Synopsis:

Allows small employers to claim tax credit for paying certain health benefits plan premiums.

Type of Impact:

Annual State revenue loss.

Agencies Affected:

Department of the Treasury.

 

 

Office of Legislative Services Estimate

Fiscal Impact

 

Annual

 

 

State Revenue Loss

 

$30.3 million to $60.7 million

 

 

 

·         The Office of Legislative Services (OLS) estimates that by allowing small employers to claim a tax credit for paying health benefits plan premiums for their employees, the State will experience an annual revenue loss of $30.3 million to $60.7 million.

 

·         The OLS notes that the annual revenue loss experienced by the State may be reflected in the General Fund and in the Property Tax Relief Fund as small employers who are eligible to claim the tax credit may do so against their Corporation Business Tax or the Gross Income Tax liability.

 

 

BILL DESCRIPTION

 

      This bill allows small employers to claim a tax credit against their Corporation Business Tax or Gross Income Tax Liabilities for paying employee health benefits plan premiums.  Under the bill, a taxpayer with fewer than 20 employees may claim a tax credit if they pay for their employees’ health benefits plan premiums for a health benefits plan that includes the essential health benefits requirements of the federal Affordable Care Act.  The entitled tax credit will equal up to $250 for each employee enrolled in a single plan and $500 for each employee enrolled in a family plan.  However, the taxpayer may only claim the full tax credit if, as an employer, the taxpayer covers the entirety of the health benefits plan premiums.  If the taxpayer covers less than 100 percent of the health benefits plan premiums, but 50 percent or more, the taxpayer may claim a reduced tax credit that is a percentage of the full tax credit equal to the percentage of premium that is covered.

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS estimates that by allowing small employers to claim a tax credit for paying health benefits plan premiums for their employees, the State will experience an annual revenue loss of $30.3 million to $60.7 million.

      This estimate is based on data published by the United States Census Bureau in the 2022 Statistics of U.S. Businesses, which indicates that New Jersey has 173,212 small employers with fewer than 20 employees that would be eligible to receive the tax credits provided in the bill.  Based on a cross analysis of gross employee data from the same survey, results from the Kaiser Family Foundation’s 2025 Employer Health Benefits Survey, and the enrollment distribution for active employees in the Plan Year 2025 Mid-Year Experience Analysis for the State Health Benefits Program, the OLS estimates that all small employers combined may claim tax credits for 11,000 employees enrolled in single coverage and 115,800 employees enrolled in family coverage.

      Under the bill, the entitled tax credit equals up to $250 for each employee enrolled in a single plan and $500 for each employee enrolled in a family plan.  If the small employer covers less than 100 percent of the health benefits plan premiums, but 50 percent or more, the small employer may claim a reduced tax credit that is a percentage of the full tax credit equal to the percentage of premium that is covered.  Therefore, a small employer may claim a tax credit ranging from $125 to $250 for each employee enrolled in single coverage and $250 to $500 for each employee enrolled in family coverage, which is reflected in the range of the estimated revenue loss.

      Additionally, the OLS notes that the annual revenue loss experienced by the State may be reflected in the General Fund and in the Property Tax Relief Fund as small employers who are eligible to claim the tax credit may do so against their Corporation Business Tax or Gross Income Tax liability.

 

 

Section:

Revenue, Finance and Appropriations

Analyst:

Camryn Mathews

Associate Fiscal Analyst

Approved:

Thomas Koenig

Legislative Budget and Finance Officer

 

 

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).