Alabama 2025 Regular Session

Alabama House Bill HB142 Compare Versions

Only one version of the bill is available at this time.

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1	1	HB142INTRODUCED
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3	3	HB142
4	4	UK2NDXG-1
5	5	By Representative Rafferty
6	6	RFD: Financial Services
7	7	First Read: 04-Feb-25
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12	12	5 UK2NDXG-1 02/04/2025 CD (F)CD 2025-529
13	13	Page 1
14	14	First Read: 04-Feb-25
15	15	SYNOPSIS:
16	16	This bill would provide for the establishment of
17	17	portable benefit accounts for independent contractors.
18	18	A BILL
19	19	TO BE ENTITLED
20	20	AN ACT
21	21	Relating to employee benefits; to add Article 7 of
22	22	Chapter 1 of Title 25, commencing with Section 25-1-70 to the
23	23	Code of Alabama 1975, to provide for the establishment of
24	24	portable benefit accounts for independent contractors; and to
25	25	provide for deductions of contributions to portable benefit
26	26	accounts for Alabama income tax purposes.
27	27	BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
28	28	Section 1. This act shall be known and may be cited as
29	29	the "Portable Benefits Act."
30	30	Section 2. Article 7, Chapter 1 of Title 25, starting
31	31	with Section 25-1-70, is added to the Code of Alabama 1975, to
32	32	read as follows:
33	33	§25-1-70 For purposes of this act, the following words
34	34	have the following meanings:
35	35	(1) BANK. A banking corporation or trust company
36	36	entitled to operate within the State of Alabama under Title 5
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66	66	entitled to operate within the State of Alabama under Title 5
67	67	of the Code of Alabama 1975.
68	68	(2) HIRING PARTY. A person or entity who hires or
69	69	enters into a contract for the performance of work with an
70	70	independent contractor.
71	71	(3) PORTABLE BENEFIT ACCOUNT. An account opened by an
72	72	independent contractor that is:
73	73	a. Administered by a portable benefit account provider;
74	74	and
75	75	b. Owned by an independent contractor for the purpose
76	76	of funding the purchase of one of more benefit plans,
77	77	including, but not limited to, plans that provide health
78	78	benefits, income replacement insurance, life insurance, or
79	79	retirement benefits.
80	80	(4) PORTABLE BENEFIT ACCOUNT PROVIDER. The
81	81	administrator of a portable benefit account and includes:
82	82	a. A bank;
83	83	b. An investment management firm; and
84	84	c. A technology provider or program manager that offers
85	85	services through a bank or investment management firm.
86	86	§25-1-71
87	87	(a) Any person or entity, including an Internet or
88	88	application based entity, may contribute funds to one or more
89	89	portable benefit accounts.
90	90	(b) Where a hiring party contributes to a portable
91	91	benefit account as a form of compensation, the contribution
92	92	shall not be used as a criterion for determining a worker's
93	93	employment classification.
94	94	(c) A contribution to a portable benefit account may be
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124	124	(c) A contribution to a portable benefit account may be
125	125	made using the funds of the hiring party or a percentage of
126	126	funds withheld from compensation owed to an independent
127	127	contractor if:
128	128	(1) The withholding of compensation is expressly agreed
129	129	to in writing by both parties;
130	130	(2) The written agreement is clear, unambiguous, and
131	131	prominently displayed either in a services agreement or other
132	132	contract between the independent contractor and the hiring
133	133	party or a separate notice;
134	134	(3) The withholding of compensation is voluntary and
135	135	requires an independent contractor to opt in; and
136	136	(4) The independent contractor may choose to opt out of
137	137	the agreement at any time.
138	138	§25-2-72
139	139	(a) A hiring party that contributes its own funds to a
140	140	portable benefit account as a form of compensation may deduct
141	141	as a business expense on the Alabama income tax return to
142	142	compute Alabama taxable income an amount equal to 100 percent
143	143	of the amount contributed from its own funds during the tax
144	144	year.
145	145	(b) A qualifying independent contractor may deduct, as
146	146	an adjustment to income on the employee's Alabama individual
147	147	income tax return, an amount equal to 100 percent of the
148	148	amount contributed by a hiring party as a form of compensation
149	149	to a portable benefit account during the applicable tax year
150	150	as well as any contributions that the independent contractor
151	151	made to a portable benefit account during the applicable tax
152	152	year.
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182	182	year.
183	183	Section 3. This act shall become effective on October
184	184	1, 2025.
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