A new provision in North Carolina's Regulatory Reform Act of 2026 lets you contribute to contractor benefits without creating an employment relationship.
Most North Carolina retail owners don't realize they can now fund benefits for independent contractors—without triggering the legal risks that used to make it too expensive to try.
That's the practical effect of a provision buried in S445, the Regulatory Reform Act of 2026. It creates a portable benefits account system that changes the math for retailers who work with gig workers, delivery partners, or other independent contractors.
Under Section 17.6 of S445 (pages 18–20), North Carolina now permits "hiring parties"—that's you—to make voluntary, tax-deductible contributions directly into independent contractors' benefit accounts. These accounts can cover health insurance, retirement savings, disability coverage, and other benefits.
The critical part: these contributions are not treated as evidence of an employment relationship. That's the legal barrier that previously stopped most retailers from offering any benefits to contractors. You used to face the risk that offering benefits would be interpreted as proof the person was actually an employee, opening you to wage-and-hour liability, misclassification claims, and tax penalties.
This provision eliminates that primary deterrent.
If your retail operation uses independent contractors—whether for delivery, seasonal work, fulfillment, or specialized services—this applies to you. The law creates a safe harbor: you can contribute to their benefits accounts, take the tax deduction, and the IRS won't treat those contributions as proof of employment.
The accounts are portable, meaning contractors keep them regardless of which business they work for. That matters: it makes the benefit more valuable to the contractor and easier for you to administer.
S445 becomes effective January 1, 2027, and applies to taxable years beginning on or after that date. That means you have time to review your contractor relationships and decide whether this makes sense for your business model.
This isn't mandatory—it's voluntary. You decide whether to participate and how much to contribute. But it does change the risk-reward calculation. If you've been hesitant to offer any benefits to contractors because of misclassification concerns, that legal barrier is now gone.
For retailers competing for contractor talent—especially in delivery, logistics, or seasonal hiring—offering portable benefits could be a competitive advantage. For contractors, it means access to benefits they might not otherwise have.
The tax deduction makes it more affordable than it might seem. You're not paying employment taxes on these contributions, and the contributions themselves are deductible business expenses.
If you work with contractors regularly, it's worth understanding how this provision applies to your specific situation. The mechanics of setting up and managing these accounts will likely be clarified in IRS guidance over the coming months.
Source: S445, Regulatory Reform Act of 2026, Section 17.6, pages 18–20; effective January 1, 2027.