SB 736 — Income tax; creating the Health Care Sharing Ministry Tax Parity Act; stating certain deduction and procedures; requiring Oklahoma Tax Commission to create forms and guidelines. Effective date.

STATE OF OKLAHOMA 2 1st Session of the 60th Legislature (2025) 3COMMITTEE SUBSTITUTE FOR SENATE BILL 736 By:

Deevers 46 5COMMITTEE ASSUBSTITUTE INTRODUCED 7 An Act relating to revenueincome andtax; taxation;

providing for income tax deduction;

providing procedure for claiming deduction;deduction on certain payments;

requiring Oklahoma Tax Commission to createprescribe forms and guidelines;

providingmaking fundscertain toincome be nontaxable;

providing for severability;

1.Req.

Health care sharing ministries (HCSMs) play a significant role in addressing medical needs for individuals and families, Req.

13211659 Page 1 providing1. financial and emotional support outside of traditional 2 health insurance;

3Health 2.care sharing ministries (HCSMs) play a significant role in addressing medical needs for individuals and families, providing financial and emotional support outside of health insurance;

HCSMs2. enable their members to share health care costs in a voluntary and community-focused manner consistent with their ethical 5 and religious beliefs;

6HCSMs 3.enable their members to share health care costs in a voluntary and community-focused manner consistent with their ethical and religious beliefs;

Despite3. their critical function, HCSM contributions and 7 payments are not currently afforded the same tax treatment as traditional health insurance premiums under state law;

Despite their critical function, HCSM contributions and 9payments 4.are not currently afforded the same tax treatment as health insurance premiums under state law;

and 4.

limits its members to those who share a common set of ethical or religious beliefs, b.Req.

facilitates sharing of medical expenses between members in accordance with its published guidelines, Req.

13211659 Page 2 c.b.

requiresfacilitates regularsharing contributionsof frommedical membersexpenses withbetween nomembers 2in assumptionaccordance ofwith riskits ethical or promisereligious tobeliefs, payc. for medical 3 expenses, d.

providesrequires aregular quarterlycontributions reportfrom to members detailingwith theno 5assumption amount of needsrisk sharedor andpromise contributionsto received,pay 6for e.medical expenses, d.

conductsprovides annuala independentquarterly auditsreport thatto aremembers publiclydetailing 7the available,amount of needs shared and f.contributions received, e.

providesconducts aannual disclaimerindependent statingaudits that itare ispublicly notavailable, an 9 insurance company and participationf. is voluntary;

provides a disclaimer stating that it is not an insurance company and participation is voluntary;

“Qualified health care sharing expenses” means contributionsamounts madepaid by a qualified individual toas a recognizedmember HCSM for the purpose of sharingan medicalHCSM; expenses or covering administrative fees;

For tax yearsyear beginning2026 onand orsubsequent aftertax Januaryyears, 1, 2026, a qualified individual is entitled to deduct the total amount of qualified health care sharing expenses paid duringby thea taxablequalified yearindividual fromduring histhe ortax heryear adjustedmay grossbe incomededucted (AGI)from on their Oklahoma stateadjusted incomegross taxincome. return.

a.Req.

self-employed individuals, in the same manner as deductions for health insurance premiums, Req.

13211659 Page 3 b.a.

employerself-employed contributionsindividuals, towardin HCSMthe membershipsame formanner 2 employees, which shall be treated as nontaxabledeductions fringefor 3health benefits,insurance andpremiums, c.b.

individualsemployer purchasingcontributions toward HCSM membership for themselvesemployees, 5which orshall theirbe dependents.treated as nontaxable fringe benefits, and c.

6individuals C.paying amounts for HCSM membership for themselves or their dependents.

C.

To claim the deduction, a qualified individual must:shall:

7 a.

submit documentation of membership and contributions to an HCSM, including any records issued by the 9 ministry, and b.

FundsFor tax year 2026 and subsequent tax years, funds received by a qualified individual from HCSM members to assist with medical expenses shall not be considered taxable incomeincome. under Oklahoma state law.

The Oklahoma Tax Commission shall beadminister responsible for administering the provisions of this act.

The Tax Commission shall issueelectronically submit an annual report to the Legislature detailing the number of deductions claimed, the total fiscalrevenue impact, and any other relevant data.

F.