The bill seeks to amend Section 40-18-15.3 of the Code of Alabama 1975, concerning the income tax deduction for health insurance premiums paid by employees and employers. The amendment revises the qualifications for both employees and employers to receive this tax deduction. For employees, the bill removes the wage cap of $50,000 and instead sets the adjusted gross income limit at $75,000 for individual filers and $150,000 for those married filing jointly. For employers, the bill specifies that they must have less than 50 employees to qualify and allows them to deduct 100 percent of the health insurance premiums paid on behalf of employees making less than $75,000 annually in wages.

Additionally, the bill introduces a new subsection (d) which states that the deductions allowed under this section will be effective from January 1, 2024, through December 31, 2028, or until the cumulative amount reported in the Report on Tax Expenditures by the Legislative Services Agency reaches ten million dollars ($10,000,000), whichever comes first. This subsection also specifies the expenditures for which this cumulative amount applies, including corporate income tax small business health insurance premiums and individual income tax small employer and employee health insurance premiums. The act will become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.

Statutes affected:
Introduced: 40-18-15, 40-18-15
Engrossed: 40-18-15, 40-18-15