The "Portable Benefits Act," as introduced in Alabama, establishes a framework for independent contractors to create portable benefit accounts. This new legislation, added as Article 7 of Chapter 1 of Title 25 in the Code of Alabama 1975, defines key terms such as "portable benefit account," "hiring party," and "portable benefit account provider." It allows any person or entity, including those operating online, to contribute to these accounts, which are intended to fund various benefit plans like health insurance and retirement benefits. Importantly, contributions made by hiring parties to these accounts will not be interpreted as establishing an employment relationship under Alabama law, thus protecting hiring parties from liability under the Alabama Workers' Compensation Act.

Additionally, the act provides tax incentives for contributions made to portable benefit accounts starting from tax years after December 31, 2025. Hiring parties can deduct their contributions as business expenses, while independent contractors can deduct contributions made by hiring parties and their own contributions on their individual income tax returns. The legislation emphasizes that no item can be deducted more than once, ensuring clarity in tax reporting. The act is set to take effect on December 31, 2025.

Statutes affected:
Introduced: 25-1-70, 25-1-70
Engrossed: 25-1-70, 25-1-70
Enrolled: 25-1-70, 25-1-70