A provision in North Carolina's new regulatory reform bill offers a tax advantage most retail owners haven't heard about yet.
Most North Carolina retail owners don't realize that a tax deduction buried in S445—the Regulatory Reform Act of 2026—could lower the cost of offering benefits to independent contractors and gig workers. If you hire contractors, this matters to your bottom line starting January 1, 2027.
Section 17.6.(b) of S445 allows hiring parties—including small retail businesses—to deduct contributions they make to portable benefit accounts for independent contractors from their North Carolina taxable income. Those same contributions are exempt from state withholding requirements under Section 17.6.(d).
In plain terms: if you voluntarily set aside money in a portable benefit account for a contractor you work with regularly, you can subtract that contribution from the income you report to North Carolina, and you don't have to withhold state taxes on it. That directly reduces what you owe the state.
This applies to retail businesses that use independent contractors or gig workers—whether that's delivery drivers, seasonal merchandisers, freelance visual designers, or other non-employee workers. It doesn't apply to W-2 employees; those relationships are governed by different tax rules.
The key word is "voluntary." You're not required to contribute to portable benefit accounts. But if you choose to, the tax code now rewards you for it.
Portable benefit accounts are designed to follow workers across jobs. Unlike traditional employer-sponsored benefits tied to a single job, these accounts let contractors build benefits—health coverage, retirement savings, paid leave—that move with them from gig to gig.
For retailers, the tax deduction lowers the effective cost of offering these accounts. You get a state income tax break for contributing, which makes it more affordable to offer benefits that help you attract and retain reliable contractors.
The provision is effective January 1, 2027, and applies to taxable years beginning on or after that date. That means the first tax year you can claim this deduction is 2027 (filed in 2028).
If you work with independent contractors, it's worth understanding what portable benefit accounts are available in your industry and how they work. Talk to your accountant about whether this strategy makes sense for your business model. The deduction won't apply retroactively, so any contributions you make before January 1, 2027, won't qualify.
This is a legitimate tax benefit written into state law—not a loophole or workaround. It's designed to encourage businesses to provide benefits to contract workers, and it's available to any hiring party that chooses to use it.
Source: S445—Regulatory Reform Act of 2026, Section 17.6.(b) and (d), Page 20.