Alabama has enacted legislation providing for the establishment of portable benefit accounts for independent contractors and, for tax years beginning after December 31, 2025, for the deduction of contributions to the accounts for Alabama income tax purposes. (L. 2025, S86 (Act 119), effective 12/31/2025.)

A “portable benefit account” is an account owned by an independent contractor for the purpose of funding the purchase of one or more benefit plans, including plans that provide health benefits, income replacement insurance, life insurance, or retirement benefits and is administered by a portable benefit account provider. A “portable benefit account provider” includes: a bank, an investment management firm, or a technology provider or program manager that offers services through a bank or investment management firm.

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