HB142 Alabama 2025 Session

Summary

Primary Sponsor

Neil RaffertyRepresentative

Democrat

Session

2025 Regular Session

Title

Labor and employment, independent contractors, establishment of portable benefit accounts.

Summary

The Portable Benefits Act would create portable benefit accounts for independent contractors and allow tax deductions for contributions by hiring parties and contractors.

What This Bill Does

It would add a new system for portable benefit accounts that independent contractors can own and fund to pay for benefits like health, retirement, and life insurance. Contributions can come from the hiring party or the contractor, with specific rules for withholding that require written agreement, opt-in, and the contractor’s ability to opt out; such withholdings would not affect how a worker is classified. The bill also provides tax deductions: hiring parties can deduct 100% of their contributions as a business expense, and qualifying contractors can deduct 100% of contributions from both sides on their Alabama tax returns.

Who It Affects

• Independent contractors would be able to open and own portable benefit accounts and access benefits funded by themselves or by hiring parties, with the option to deduct contributions on Alabama taxes.
• Hiring parties (employers or entities that hire contractors) could contribute funds to portable benefit accounts as a form of compensation and deduct those contributions on their Alabama tax return, subject to written consent, opt-in requirements, and the ability for contractors to opt out.

Key Provisions

• Creates portable benefit accounts for independent contractors, administered by a portable benefit account provider (bank, investment firm, or tech provider) and owned by the contractor to fund various benefit plans.
• Allows contributions to portable benefit accounts from hiring parties or independent contractors; withholdings from compensation for contributions require written agreement, must be clear and opt-in, and the contractor may opt out at any time.
• Provides tax deductions: hiring parties can deduct 100% of their contributions as a business expense; qualifying contractors can deduct 100% of contributions from the hiring party and their own contributions on Alabama tax returns.
• Effective date: the act becomes effective October 1, 2025.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Labor & Employment