Relating to income taxes; to amend Section 40-18-15.3, Code of Alabama 1975, to revise the qualifications for employees and employers to receive the income tax deduction for health insurance premiums paid.
Impact
If enacted, SB102 would have a significant impact on Alabama's tax revenue and the landscape of health insurance affordability for lower-income employees. By providing a full tax deduction for health insurance premiums, the bill seeks to encourage small employers to offer insurance to their employees and lessen the financial burden on those who might struggle to afford such benefits. The bill implements a cap on the total deductions available annually, limited to five million dollars, which would help manage the overall fiscal impact on the state budget.
Summary
Senate Bill 102, introduced by Senator Orr, aims to revise the qualifications for tax deductions related to health insurance premiums for employees and employers in Alabama. Specifically, it amends Section 40-18-15.3 of the Code of Alabama 1975 to allow qualifying employees to deduct 100 percent of their health insurance premium payments when their employer provides an employer-sponsored health insurance plan. This change targets Alabama resident employees earning no more than $50,000 and adjusted gross incomes up to $75,000 for single filers, or $150,000 for those filing jointly. Furthermore, the bill specifies that qualifying employers must have fewer than 25 employees to provide these deductions.
Contention
Potential points of contention around SB102 may arise regarding the definitions and limits on qualifying employers and employees. Critics may argue that the eligibility threshold set at $50,000 for individuals and $75,000 for families may exclude a significant portion of the middle class from benefitting from the deduction. Additionally, there may be discussions on whether the threshold for employers having less than 25 employees is too restrictive, and if this could discourage larger companies from offering similar health benefits. The finite cap on tax credits could also spark debates on equity in access to health care coverage.
Income Taxes; to make technical changes to the funding provisions of the CHOOSE Act credits and increase funding, and to extend the sunset date for deductions for ABLE contributions.