Sen. Arthur Orr, R-Decatur, the chair of the Senate Finance and Taxation Education Committee, speaks to reporters after a presentation on the state’s fiscal condition on Feb. 5, 2025 at the Alabama Statehouse in Montgomery, Alabama. (Brian Lyman/Alabama Reflector)
Lawmakers endorsed a bill Thursday that would allow independent contractors in Alabama to establish portable benefit accounts.
The Portable Benefits Task Force endorsed SB 86, sponsored by Sen. Arthur Orr, R-Decatur, which aims to provide gig workers with greater access to health insurance, retirement plans, and other benefits traditionally tied to full-time employment. Similar legislation was introduced in the House by Rep. Neil Rafferty, D-Birmingham, but task force members agreed to move forward with the amended Senate version.
“I guess my request would be for everybody to look at the [Senate bill] and what I’d like to do is have this commission endorse that,” Orr said, though he added that they still have a year to make changes if they feel it’s needed.
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The legislation would allow independent contractors to open “portable benefits accounts,” or tax-advantaged accounts, to fund benefit plans. Hiring entities could also contribute to these accounts without the payments being considered evidence of an employment relationship under state law.
One amendment provided tax deductions would begin in 2026 and could be deducted more than once. Another amendment clarified that independent workers could not be considered employees.
Rafferty, who co-chairs the task force, said he agreed to move forward with the amended version and that “we’ll keep it moving and take any amendments that we find absolutely necessary to get in there.”
Under the proposal, contributions made by hiring parties or independent contractors themselves would be deductible on Alabama state income tax returns starting in 2026. Hiring entities could deduct 100% of their contributions as business expenses, while contractors could deduct both their own contributions and any made on their behalf.
Committee members raised questions about the voluntary nature of the contributions and protections for workers. Orr said that participation would be optional and subject to clear agreements.
The bill passed the Senate 32-0 last month and is now under consideration in the House.
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