Income Taxes, tax deduction for members of a Health Care Sharing Ministry for certain health care sharing expenses
Summary
SB245 would create the “Health Care Sharing Ministries Tax Parity Act” and allow Alabama taxpayers who are members of a health care sharing ministry to claim an income tax deduction for qualified health care sharing expenses. The deduction would apply to tax years beginning on or after January 1, 2027, and would equal the amount contributed by the qualified individual to the ministry during the taxable year. The bill also provides that certain qualified health care sharing contributions received for medical expenses, where no deduction was previously taken, would not be treated as taxable income.
The bill defines a health care sharing ministry by reference to existing Alabama law and directs the Alabama Department of Revenue to administer the deduction, require supporting information, and adopt rules to implement the act. It would become effective October 1, 2026, if enacted. In practical terms, the bill would extend a tax benefit similar to those already available for health insurance premiums and health savings accounts to members of health care sharing ministries.
Impact
SB245 would amend Alabama income tax treatment by creating a new deduction from adjusted gross income for qualified health care sharing expenses, thereby reducing taxable income for eligible ministry members. It would also exclude certain reimbursed or received health care sharing contributions from taxable income when no prior deduction was claimed. The Alabama Department of Revenue would be responsible for rulemaking and administration, and taxpayers would need to document eligibility and expenses on their state returns.
Sentiment
The bill’s stated purpose suggests a supportive policy approach toward health care sharing ministry members by placing them on similar tax footing with taxpayers who use traditional health insurance or health savings accounts. However, the available record shows no committee transcript or vote history, and the bill’s last action was “Indefinitely Postponed,” indicating it did not advance. Based on the text alone, the measure appears to have been framed as a parity and tax-relief proposal rather than a controversial restructuring of the tax code.
Contention
The main policy issue is whether contributions to health care sharing ministries should receive the same tax treatment as health insurance premiums and health savings account contributions. Supporters would likely view the bill as promoting religious liberty, consumer choice, and tax parity for members of faith-based cost-sharing arrangements. Potential critics could question whether these arrangements should receive the same tax preference as regulated insurance products, whether the deduction would reduce state revenue, and how the Department of Revenue would verify eligibility and expenses.
Income Taxes; to make technical changes to the funding provisions of the CHOOSE Act credits and increase funding, and to extend the sunset date for deductions for ABLE contributions.