SB131 Alabama 2016 Session

Updated Feb 24, 2026

Summary

Primary Sponsor: Paul Sanford
Republican
Session: Regular Session 2016
Title: Health Savings Accounts, income tax deduction auth. for contributions to, Sec. 40-18-15.6 added.
Summary: SB131 would allow Alabama residents to deduct Health Savings Account contributions on their state income tax returns, mirroring federal rules, beginning in 2018.
What This Bill Does
The bill adds a new section to Alabama law to allow deductions for Health Savings Account contributions up to the federal limit (as defined by 26 USC §223). It lets Alabama residents deduct such contributions made on or after January 1, 2018, while employer contributions are not deductible. It also repeals conflicting laws and becomes effective for taxable years starting after December 31, 2017.

Who It Affects
Alabama residents who contribute to Health Savings Accounts: they would be able to deduct their own HSA contributions on their Alabama individual income tax return, up to the federal limit.
Employers and employees with HSAs: employer contributions to HSAs are not deductible for Alabama income tax and are not included in the employee's income for tax purposes.

Key Provisions
Adds Section 40-18-15.6 defining health savings account contributions as those up to the federal maximum under 26 USC §223.
Allows Alabama residents to deduct contributions made on or after January 1, 2018 to their Health Savings Accounts, aligned with federal limits; employer contributions are not deductible.
Repeals laws or parts of laws that conflict with this act.
Effective for taxable years beginning after December 31, 2017.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Taxation