Text of MS HB 866 (2026)

MISSISSIPPI LEGISLATURE 2026 Regular Session To: Business and Commerce By: Representative Lamar House Bill 866 AN ACT TO PROVIDE FOR THE ESTABLISHMENT OF PORTABLE BENEFIT ACCOUNTS FOR INDEPENDENT CONTRACTORS; TO AUTHORIZE A HIRING PARTY TO CONTRIBUTE FUNDS TO THE PORTABLE BENEFIT ACCOUNT FOR AN INDEPENDENT CONTRACTOR; TO PROVIDE THAT A HIRING PARTY MAY WITHHOLD A PERCENTAGE OF FUNDS FROM THE COMPENSATION OWED TO AN INDEPENDENT CONTRACTOR IF BOTH PARTIES AGREE TO THE WITHHOLDING IN WRITING; TO BRING FORWARD SECTIONS 27-7-16, 27-7-17 AND 71-9-5, MISSISSIPPI CODE OF 1972, FOR THE PURPOSE OF POSSIBLE AMENDMENT; AND FOR RELATED PURPOSES. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: SECTION 1. (1) As used in this section, the following words shall have the meanings as defined in this subsection, unless the context clearly indicates otherwise: (a) "Bank" means that term as defined in Section 3(a)(1) of the Federal Deposit Insurance Act (12 USC Section 1813(a)(1)). (b) "Benefit plan" means benefits that may customarily be provided by an employer as part of a benefit plan, including, but not limited to: (i) Health insurance; (ii) Income replacement insurance; (iii) Life insurance; and (iv) Retirement benefits. (c) "Hiring party" means a person or entity who hires or enters into a contract with an independent contractor for the performance of work. (d) "Independent contractor" means a person who contracts to do a piece of work according to his or her own methods without being subject to the control of his or her employer except as to the results of the work, and who has the right to employ and direct the outcome of the workers independent of the employer and free from any superior authority in the employer to say how the specified work must be done or what the laborers must do as the work progresses. (e) "Portable benefit account" means an account: (i) Owned by an independent contractor for the purpose of funding the purchase of one or more benefit plans; (ii) Administered by a third-party portable benefit account provider chosen by the independent contractor; and (iii) Assigned to a beneficiary of one or more benefit plans rather than a hiring party. (f) "Portable benefit account provider" means: (i) A bank; (ii) An investment management firm; or (iii) A technology provider or program manager that offers services through a bank or investment management firm. (2) A hiring party, including an Internet or application based entity, may contribute funds to a portable benefit account for an independent contractor. (3) Contributions to a portable benefit account may be made using the funds of a hiring party or a percentage of funds withheld from the compensation owed to an independent contractor, as long as: (a) Both the hiring party and the independent contractor have agreed to withholding such compensation in a written agreement; (b) The written agreement is clear, unambiguous and prominently displayed either in the contract for work entered into between the hiring party and the independent contractor, or in a separate notice; (c) The withholdings are voluntary and require the independent contractor to opt-in; and (d) The independent contractor may choose to opt-out of the withholdings at any time. (4) Contributions to a portable benefit account may not be used as a criterion for determining a worker's employment classification or construed by a Mississippi court as any element of an employment relationship, including, but not limited to, for purposes of imposing liability on the hiring party under the Workers' Compensation Law (Chapter 3, Title 71, Mississippi Code of 1972). This section may not be construed to create a right for independent contractors to receive compensation under the Workers' Compensation Law or to participate in any state retirement plan. SECTION 2. Section 27-7-16, Mississippi Code of 1972, is brought forward as follows: 27-7-16. Amounts contributed in the taxable year by employees and/or self-employed individuals, including partners, to an employees' pension trust, tax-sheltered annuity plan, authorized deferred compensation plan, self-employed retirement plan, individual retirement account or retirement bond which meets the requirements of a qualified plan under the provisions of the Internal Revenue Code of 1986, as amended, shall be deductible from gross income, subject to the conditions and limitations of the Internal Revenue Code of 1986, as amended. Amounts contributed in the taxable year to a Roth individual retirement account shall be treated in the same manner as provided under the Internal Revenue Code of 1986, as amended. SECTION 3. Section 27-7-17, Mississippi Code of 1972, is brought forward as follows: 27-7-17. In computing taxable income, there shall be allowed as deductions: (1) Business deductions. (a) Business expenses. All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered; nonreimbursable traveling expenses incident to current employment, including a reasonable amount expended for meals and lodging while away from home in the pursuit of a trade or business; and rentals or other payments required to be made as a condition of the continued use or possession, for purposes of the trade or business of property to which the taxpayer has not taken or is not taking title or in which he had no equity. Expense incurred in connection with earning and distributing nontaxable income is not an allowable deduction. Limitations on entertainment expenses shall conform to the provisions of the Internal Revenue Code of 1986. There shall also be allowed a deduction for expenses as provided in Section 41-137-51. (b) Interest. All interest paid or accrued during the taxable year on business indebtedness, except interest upon the indebtedness for the purchase of tax-free bonds, or any stocks, the dividends from which are nontaxable under the provisions of this article; provided, however, in the case of securities dealers, interest payments or accruals on loans, the proceeds of which are used to purchase tax-exempt securities, shall be deductible if income from otherwise tax-free securities is reported as income. Investment interest expense shall be limited to investment income. Interest expense incurred for the purchase of treasury stock, to pay dividends, or incurred as a result of an undercapitalized affiliated corporation may not be deducted unless an ordinary and necessary business purpose can be established to the satisfaction of the commissioner. For the purposes of this paragraph, the phrase "interest upon the indebtedness for the purchase of tax-free bonds" applies only to the indebtedness incurred for the purpose of directly purchasing tax-free bonds and does not apply to any other indebtedness incurred in the regular course of the taxpayer's business. Any corporation, association, organization or other entity taxable under Section 27-7-23(c) shall allocate interest expense as provided in Section 27-7-23(c)(3)(I). (c) Taxes. Taxes paid or accrued within the taxable year, except state and federal income taxes, excise taxes based on or measured by net income, estate and inheritance taxes, gift taxes, cigar and cigarette taxes, gasoline taxes, and sales and use taxes unless incurred as an item of expense in a trade or business or in the production of taxable income. In the case of an individual, taxes permitted as an itemized deduction under the provisions of subsection (3)(a) of this section are to be claimed thereunder. (d) Business losses. (i) Losses sustained during the taxable year not compensated for by insurance or otherwise, if incurred in trade or business, or nonbusiness transactions entered into for profit. (ii) Limitations on losses from passive activities and rental real estate shall conform to the provisions of the Internal Revenue Code of 1986. (e) Bad debts. Losses from debts ascertained to be worthless and charged off during the taxable year, if sustained in the conduct of the regular trade or business of the taxpayer; provided, that such losses shall be allowed only when the taxpayer has reported as income, on the accrual basis, the amount of such debt or account. (f) Depreciation. (i) A reasonable allowance for exhaustion, wear and tear of property used in the trade or business, or rental property, and depreciation upon buildings based upon their reasonable value as of March 16, 1912, if acquired prior thereto, and upon cost if acquired subsequent to that date. In the case of new or used aircraft, equipment, engines, or other parts and tools used for aviation, allowance for bonus depreciation conforms with the federal bonus depreciation rates and reasonable allowance for depreciation under this section is no less than one hundred percent (100%). (ii) 1. For the purposes of computing income tax for tax years beginning after December 31, 2022, a taxpayer may treat specified research or experimental expenditures that are paid or incurred by the taxpayer during the tax year in connection with the taxpayer's trade or business as expenses that are not chargeable to the capital account. Such expenditures so treated shall be allowed as an immediate deduction. Such expenditures shall remain allowable as a full and immediate expense deduction in the year in which the expenses are incurred notwithstanding any changes to the federal Internal Revenue Code related to the depreciation of such specified research or experimental expenditures. A taxpayer may alternatively treat the depreciation of such specified research or experimental expenditures in accordance with the schedule provided in 26 USCS Section 174. A taxpayer may make an election whether to take a full and immediate deduction for such expenditures and/or to depreciate the expenditures in accordance with 26 USCS Section 174. Such an election may be made for any tax year if made not later than the time prescribed by law for filing the return for such tax year, including extensions thereof. The method so elected by the taxpayer is irrevocable unless the commissioner specifically allows a change in the method. 2. For the purpose of computing income tax for tax years beginning after December 31, 2022, expenditures for business assets that are qualified property or qualified improvement property shall be eligible for one hundred percent (100%) bonus depreciation and may be deducted as an expense incurred by the taxpayer during the tax year during which the property is placed in service, notwithstanding any changes to federal law related to cost recovery beginning on January 1, 2023, or on any other date. A taxpayer may alternatively treat the depreciation of such business assets in accordance with the schedule provided in 26 USCS Section 168. A taxpayer may make an election whether to take a bonus depreciation deduction for such expenditures and/or to depreciate the expenditures in accordance with 26 USCS Section 168. Such an election may be made for any tax year if made not later than the time prescribed by law for filing the return for such tax year, including extensions thereof. The method so elected by the taxpayer is irrevocable unless the commissioner specifically allows a change in the method. 3. In any taxable year in which any 26 USCS Section 179 property is placed in service, a taxpayer may elect to treat the cost of such property as an expense which is not chargeable to a capital account, and any cost so treated shall be allowed as a deduction for that year. Mississippi's treatment of the deduction shall conform to the provisions of 26 USCS Section 179 in effect for that year. 4. For the purposes of this subparagraph (ii), unless the context requires otherwise, the following terms shall have the meanings ascribed herein: a. "Qualified improvement property" means and has the same definition as such term has in 26 USCS Section 168(e)(6) as it existed on January 1, 2021, and shall apply to property placed in service after December 31, 2022. b. "Qualified property" means and has the same definition as such term has in 26 USCS Section 168(k) as it existed on January 1, 2021, and shall apply to property placed in service after December 31, 2022. c. "Specified research or experimental expenditures" means and has the same definition as such term has in 26 USCS Section 174 as it existed on January 1, 2021. 5. Nothing in this subparagraph (ii) shall be construed to nullify or otherwise alter the treatment of depreciation expenses for any tax year prior to 2023. 6. The total of any method or combination of methods of depreciation used under this subparagraph (ii) cannot exceed one hundred percent (100%) of the cost of the subject property. (g) Depletion. In the case of mines, oil and gas wells, other natural deposits and timber, a reasonable allowance for depletion and for depreciation of improvements, based upon cost, including cost of development, not otherwise deducted, or fair market value as of March 16, 1912, if acquired prior to that date, such allowance to be made upon regulations prescribed by the commissioner, with the approval of the Governor. (h) Contributions or gifts. Except as otherwise provided in paragraph (p) of this subsection or subsection (3)(a) of this section for individuals, contributions or gifts made by corporations within the taxable year to corporations, organizations, associations or institutions, including Community Chest funds, foundations and trusts created solely and exclusively for religious, charitable, scientific or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inure to the benefit of any private stockholder or individual. This deduction shall be allowed in an amount not to exceed twenty percent (20%) of the net income. Such contributions or gifts shall be allowable as deductions only if verified under rules and regulations prescribed by the commissioner, with the approval of the Governor. Contributions made in any form other than cash shall be allowed as a deduction, subject to the limitations herein provided, in an amount equal to the actual market value of the contributions at the time the contribution is actually made and consummated. (i) Reserve funds - insurance companies. In the case of insurance companies the net additions required by law to be made within the taxable year to reserve funds when such reserve funds are maintained for the purpose of liquidating policies at maturity. (j) Annuity income. The sums, other than dividends, paid within the taxpayer year on policy or annuity contracts when such income has been included in gross income. (k) Contributions to employee pension plans. Contributions made by an employer to a plan or a trust forming part of a pension plan, stock bonus plan, disability or death-benefit plan, or profit-sharing plan of such employer for the exclusive benefit of some or all of his, their, or its employees, or their beneficiaries, shall be deductible from his, their, or its income only to the extent that, and for the taxable year in which, the contribution is deductible for federal income tax purposes under the Internal Revenue Code of 1986 and any other provisions of similar purport in the Internal Revenue Laws of the United States, and the rules, regulations, rulings and determinations promulgated thereunder, provided that: (i) The plan or trust be irrevocable. (ii) The plan or trust constitute a part of a pension plan, stock bonus plan, disability or death-benefit plan, or profit-sharing plan for the exclusive benefit of some or all of the employer's employees and/or officers, or their beneficiaries, for the purpose of distributing the corpus and income of the plan or trust to such employees and/or officers, or their beneficiaries. (iii) No part of the corpus or income of the plan or trust can be used for purposes other than for the exclusive benefit of employees and/or officers, or their beneficiaries. Contributions to all plans or to all trusts of real or personal property (or real and personal property combined) or to insured plans created under a retirement plan for which provision has been made under the laws of the United States of America, making such contributions deductible from income for federal income tax purposes, shall be deductible only to the same extent under the Income Tax Laws of the State of Mississippi. (l) Net operating loss carrybacks and carryovers. A net operating loss for any taxable year ending after December 31, 1993, and taxable years thereafter, shall be a net operating loss carryback to each of the three (3) taxable years preceding the taxable year of the loss. If the net operating loss for any taxable year is not exhausted by carrybacks to the three (3) taxable years preceding the taxable year of the loss, then there shall be a net operating loss carryover to each of the fifteen (15) taxable years following the taxable year of the loss beginning with any taxable year after December 31, 1991. For any taxable year ending after December 31, 1997, the period for net operating loss carrybacks and net operating loss carryovers shall be the same as those established by the Internal Revenue Code and the rules, regulations, rulings and determinations promulgated thereunder as in effect at the taxable year end or on December 31, 2000, whichever is earlier. A net operating loss for any taxable year ending after December 31, 2001, and taxable years thereafter, shall be a net operating loss carryback to each of the two (2) taxable years preceding the taxable year of the loss. If the net operating loss for any taxable year is not exhausted by carrybacks to the two (2) taxable years preceding the taxable year of the loss, then there shall be a net operating loss carryover to each of the twenty (20) taxable years following the taxable year of the loss beginning with any taxable year after the taxable year of the loss. The term "net operating loss," for the purposes of this paragraph, shall be the excess of the deductions allowed over the gross income; provided, however, the following deductions shall not be allowed in computing same: (i) No net operating loss deduction shall be allowed. (ii) No personal exemption deduction shall be allowed. (iii) Allowable deductions which are not attributable to taxpayer's trade or business shall be allowed only to the extent of the amount of gross income not derived from such trade or business. Any taxpayer entitled to a carryback period as provided by this paragraph may elect to relinquish the entire carryback period with respect to a net operating loss for any taxable year ending after December 31, 1991. The election shall be made in the manner prescribed by the Department of Revenue and shall be made by the due date, including extensions of time, for filing the taxpayer's return for the taxable year of the net operating loss for which the election is to be in effect. The election, once made for any taxable year, shall be irrevocable for that taxable year. (m) Amortization of pollution or environmental control facilities. Allowance of deduction. Every taxpayer, at his election, shall be entitled to a deduction for pollution or environmental control facilities to the same extent as that allowed under the Internal Revenue Code and the rules, regulations, rulings and determinations promulgated thereunder. (n) Dividend distributions - real estate investment trusts. "Real estate investment trust" (hereinafter referred to as REIT) shall have the meaning ascribed to such term in Section 856 of the federal Internal Revenue Code of 1986, as amended. A REIT is allowed a dividend distributed deduction if the dividend distributions meet the requirements of Section 857 or are otherwise deductible under Section 858 or 860, federal Internal Revenue Code of 1986, as amended. In addition: (i) A dividend distributed deduction shall only be allowed for dividends paid by a publicly traded REIT. A qualified REIT subsidiary shall be allowed a dividend distributed deduction if its owner is a publicly traded REIT. (ii) Income generated from real estate contributed or sold to a REIT by a shareholder or related party shall not give rise to a dividend distributed deduction, unless the shareholder or related party would have received the dividend distributed deduction under this chapter. (iii) A holding corporation receiving a dividend from a REIT shall not be allowed the deduction in Section 27-7-15(4)(t). (iv) Any REIT not allowed the dividend distributed deduction in the federal Internal Revenue Code of 1986, as amended, shall not be allowed a dividend distributed deduction under this chapter. The commissioner is authorized to promulgate rules and regulations consistent with the provisions in Section 269 of the federal Internal Revenue Code of 1986, as amended, so as to prevent the evasion or avoidance of state income tax. (o) Contributions to college savings trust fund accounts. Contributions or payments to a Mississippi Affordable College Savings Program account are deductible as provided under Section 37-155-113. Payments made under a prepaid tuition contract entered into under the Mississippi Prepaid Affordable College Tuition Program are deductible as provided under Section 37-155-17. (p) Contributions of human pharmaceutical products. To the extent that a "major supplier" as defined in Section 27-13-13(2)(d) contributes human pharmaceutical products in excess of Two Hundred Fifty Million Dollars ($250,000,000.00) as determined under Section 170 of the Internal Revenue Code, the charitable contribution limitation associated with those donations shall follow the federal limitation but cannot result in the Mississippi net income being reduced below zero. (q) Contributions to ABLE trust fund accounts. Contributions or payments to a Mississippi Achieving a Better Life Experience (ABLE) Program account are deductible as provided under Section 43-28-13. (2) Restrictions on the deductibility of certain intangible expenses and interest expenses with a related member. (a) As used in this subsection (2): (i) "Intangible expenses and costs" include: 1. Expenses, losses and costs for, related to, or in connection directly or indirectly with the direct or indirect acquisition, use, maintenance or management, ownership, sale, exchange or any other disposition of intangible property to the extent such amounts are allowed as deductions or costs in determining taxable income under this chapter; 2. Expenses or losses related to or incurred in connection directly or indirectly with factoring transactions or discounting transactions; 3. Royalty, patent, technical and copyright fees; 4. Licensing fees; and 5. Other similar expenses and costs. (ii) "Intangible property" means patents, patent applications, trade names, trademarks, service marks, copyrights and similar types of intangible assets. (iii) "Interest expenses and cost" means amounts directly or indirectly allowed as deductions for purposes of determining taxable income under this chapter to the extent such interest expenses and costs are directly or indirectly for, related to, or in connection with the direct or indirect acquisition, maintenance, management, ownership, sale, exchange or disposition of intangible property. (iv) "Related member" means an entity or person that, with respect to the taxpayer during all or any portion of the taxable year, is a related entity, a component member as defined in the Internal Revenue Code, or is an entity or a person to or from whom there is attribution of stock ownership in accordance with Section 1563(e) of the Internal Revenue Code. (v) "Related entity" means: 1. A stockholder who is an individual or a member of the stockholder's family, as defined in regulations prescribed by the commissioner, if the stockholder and the members of the stockholder's family own, directly, indirectly, beneficially or constructively, in the aggregate, at least fifty percent (50%) of the value of the taxpayer's outstanding stock; 2. A stockholder, or a stockholder's partnership, limited liability company, estate, trust or corporation, if the stockholder and the stockholder's partnerships, limited liability companies, estates, trusts and corporations own, directly, indirectly, beneficially or constructively, in the aggregate, at least fifty percent (50%) of the value of the taxpayer's outstanding stock; 3. A corporation, or a party related to the corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation, if the taxpayer owns, directly, indirectly, beneficially or constructively, at least fifty percent (50%) of the value of the corporation's outstanding stock under regulation prescribed by the commissioner; 4. Any entity or person which would be a related member under this section if the taxpayer were considered a corporation for purposes of this section. (b) In computing net income, a taxpayer shall add back otherwise deductible interest expenses and costs and intangible expenses and costs directly or indirectly paid, accrued to or incurred, in connection directly or indirectly with one or more direct or indirect transactions with one or more related members. (c) The adjustments required by this subsection shall not apply to such portion of interest expenses and costs and intangible expenses and costs that the taxpayer can establish meets one (1) of the following: (i) The related member directly or indirectly paid, accrued or incurred such portion to a person during the same income year who is not a related member; or (ii) The transaction giving rise to the interest expenses and costs or intangible expenses and costs between the taxpayer and related member was done primarily for a valid business purpose other than the avoidance of taxes, and the related member is not primarily engaged in the acquisition, use, maintenance or management, ownership, sale, exchange or any other disposition of intangible property. (d) Nothing in this subsection shall require a taxpayer to add to its net income more than once any amount of interest expenses and costs or intangible expenses and costs that the taxpayer pays, accrues or incurs to a related member. (e) The commissioner may prescribe such regulations as necessary or appropriate to carry out the purposes of this subsection, including, but not limited to, clarifying definitions of terms, rules of stock attribution, factoring and discount transactions. (3) Individual nonbusiness deductions. (a) The amount allowable for individual nonbusiness itemized deductions for federal income tax purposes where the individual is eligible to elect, for the taxable year, to itemize deductions on his federal return except the following: (i) The deduction for state income taxes paid or other taxes allowed for federal purposes in lieu of state income taxes paid; (ii) The deduction for gaming losses from gaming establishments; (iii) The deduction for taxes collected by licensed gaming establishments pursuant to Section 27-7-901; (iv) The deduction for taxes collected by gaming establishments pursuant to Section 27-7-903; and (v) The deduction for medical expenses for the provision of gender transition procedures as defined in Section 41-141-3. (b) In lieu of the individual nonbusiness itemized deductions authorized in paragraph (a), for all purposes other than ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, an optional standard deduction of: (i) Three Thousand Four Hundred Dollars ($3,400.00) through calendar year 1997, Four Thousand Two Hundred Dollars ($4,200.00) for the calendar year 1998 and Four Thousand Six Hundred Dollars ($4,600.00) for each calendar year thereafter in the case of married individuals filing a joint or combined return; (ii) One Thousand Seven Hundred Dollars ($1,700.00) through calendar year 1997, Two Thousand One Hundred Dollars ($2,100.00) for the calendar year 1998 and Two Thousand Three Hundred Dollars ($2,300.00) for each calendar year thereafter in the case of married individuals filing separate returns; (iii) Three Thousand Four Hundred Dollars ($3,400.00) in the case of a head of family; or (iv) Two Thousand Three Hundred Dollars ($2,300.00) in the case of an individual who is not married. In the case of a husband and wife living together, having separate incomes, and filing combined returns, the standard deduction authorized may be divided in any manner they choose. In the case of separate returns by a husband and wife, the standard deduction shall not be allowed to either if the taxable income of one of the spouses is determined without regard to the standard deduction. (c) A nonresident individual shall be allowed the same individual nonbusiness deductions as are authorized for resident individuals in paragraph (a) or (b) of this subsection; however, the nonresident individual is entitled only to that proportion of the individual nonbusiness deductions as his net income from sources within the State of Mississippi bears to his total or entire net income from all sources. (4) Nothing in this section shall permit the same item to be deducted more than once, either in fact or in effect. (5) Notwithstanding any other provision in Title 27, Mississippi Code of 1972, there shall be allowed an income tax deduction for otherwise deductible expenses if: (a) The payment(s) for such deductible expenses are made with the grant or loan program of the Paycheck Protection Program as authorized under (i) the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Consolidated Appropriations Act of 2021, (ii) the COVID-19 Economic Injury Disaster Loan Program, (iii) the 2020 COVID-19 Mississippi Business Assistance Act, (iv) the Rental Assistance Grant Program, (v) the Shuttered Venue Operators Grant Program and Restaurant Revitalization Fund authorized by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, and amended by the federal American Rescue Plan Act, and/or (vi) the Mississippi Agriculture Stabilization Act; and (b) Such deductible expenses shall be allowed as deductions for federal income tax purposes. SECTION 4. Section 71-9-5, Mississippi Code of 1972, is brought forward as follows: 71-9-5. (1) Each employer shall be permitted to offer voluntarily the following programs: (a) Continued coverage under the employer's existing health coverage policy, certificate or contract; or (b) Participation in a medical savings account program. (2) An employer that previously did not provide an accident and health insurance policy, certificate or contract for his or her employees may establish a medical savings account program. In this case, the premium reduction referred to in Section 71-9-3(j)(ii) of this chapter shall be based on the cost of similar coverage with a Five Hundred Dollar ($500.00) deductible. (3) A resident individual may establish a medical savings account for the benefit of himself or herself and his or her dependents. Contributions to a medical savings account established by a resident individual for a tax year shall not exceed the allowable deductible for a qualified higher deductible health plan. (4) Except as otherwise provided by law, the principal contributed and the interest earned on a medical savings account shall be excluded from the taxable gross income of the account holder under Section 27-7-15. SECTION 5. This act shall take effect and be in force from and after July 1, 2026.