Budget & Taxes (Income Tax)

signed · Alabama · House Apr 17, 2026

HB 527: Individual income taxes; deduction for qualified overtime income established.

HB 527 creates a new Alabama individual income tax deduction for overtime pay. It allows taxpayers to deduct up to $1,000 annually from their taxable income for qualified overtime compensation earned during the year, effective for tax returns filed in 2025 through 2027. This directly affects Alabama residents who earn overtime wages, reducing their taxable income by up to $1,000 per year. The bill amends existing tax code language to add this specific deduction while making minor technical updates to the statute.

Topics ✓ Budget & TaxesSupports Budget & TaxesCreates tax deduction for overtime income, reducing taxable income for residents - provides direct tax relief per bill's explicit purpose.95% confidence

Sub-Topics Income Tax

passed · Alabama · House Feb 10, 2026

HB 175: Income tax; credit for donation to food banks.

HB 175 creates a state income tax credit for Alabama farmers and food establishments that donate safe-to-eat farm products (like fruits, vegetables, dairy, or meat) to qualifying food banks. Donors can claim a credit equal to 15% of the donated food's value (capped at $5,000 per year), calculated using federal tax rules for charitable food donations. The credit is limited to $2 million total statewide annually and expires after the 2031 tax year, with applications processed on a first-come, first-served basis until the cap is reached. The bill takes effect in 2027 and aims to encourage food donations without requiring recipients to pay for the donations.

Topics ✓ Budget & TaxesSupports Budget & TaxesCreates tax credit for food donations, providing tax relief to incentivize charitable giving to food banks, supporting public service funding through fiscal incentives.95% confidence

Sub-Topics Income Tax Tax Credits

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in committee · Alabama · House Jan 29, 2026

HB 350: To establish the Angel Investor Tax Credit Act

HB 350 creates the Angel Investor Tax Credit Act, allowing Alabama residents or entities investing in qualifying startups to claim a 25% income tax credit on their investments. The credit applies to investments in businesses headquartered in Alabama with ≤100 employees, operating for ≤10 years, and focused on sectors like manufacturing, technology, or agribusiness (excluding retail or financial services). At least 50% of annual credits are reserved for "priority impact businesses" in healthcare, agriculture, education, or workforce development. Credits are capped at $250,000 per investor yearly and $12 million total annually for subsequent years, with requirements to maintain operations in Alabama for three years.

Topics ✗ Budget & TaxesOpposes Budget & TaxesProvides 25% tax credit to investors (primarily wealthy), reducing state tax revenue per oppose indicators for tax breaks for wealthy.85% confidence ✓ HealthcareSupports HealthcareReserves 50% of tax credits for healthcare-focused startups, directing funding toward health sector innovation and business development.95% confidence ✓ TechnologySupports TechnologyBill explicitly targets technology as an eligible sector for tax credits, incentivizing investment in tech startups through 25% income tax credits.95% confidence

Sub-Topics Income Tax Tax Credits Tax Incentives

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died · Alabama · Senate Apr 7, 2026

SB 69: Income tax; certain compensation of civilian employees of Armed Forces, exempt

SB 69 expands Alabama's existing income tax exemption for active-duty military personnel to include civilian employees of the U.S. Department of Defense and Armed Forces. It exempts their compensation from state income tax when earned while serving in a combat zone, deployed outside the U.S., or activated for emergencies by Alabama's governor or the President. This change directly affects civilian defense workers who meet these specific service conditions. The exemption applies to tax years beginning January 1, 2027.

Topics ✓ Budget & TaxesSupports Budget & TaxesExempts military civilian workers' income from state tax, providing tax relief per Taxation & Revenue subject95% confidence

Sub-Topics Income Tax Tax Incentives

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passed · Alabama · House Mar 5, 2026

HB 342: Taxation; participation in the federal tax credit for individuals making qualified contributions to scholarship granting organizations provided for

HB 342 allows Alabama to participate in a federal tax credit program that enables individuals to claim a credit on their federal income tax for contributions to scholarship granting organizations (SGOs). The bill requires the Alabama Department of Revenue to annually submit a list of qualifying SGOs in the state to the federal government and certify Alabama's participation. This ensures Alabama residents can use the federal credit for eligible contributions starting in tax years after 2026. The bill takes effect immediately and does not create a new state tax credit.

Topics ✓ Budget & TaxesSupports Budget & TaxesBill enables federal tax credit for contributions to scholarship organizations, providing direct tax relief to individuals. This aligns with tax relief indicators for the Budget & Taxes topic.95% confidence ✓ EducationSupports EducationEnables tax credits for private school scholarships via SGOs, expanding educational access for K-12 students through private school funding options.90% confidence

Sub-Topics Income Tax Tax Credits School Choice Student Financial Aid

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passed · Alabama · House Feb 12, 2026

HB 190: Railroad Modernization Act of 2019, to increase the cap on income tax credits and extend the sunset date for five years through tax year 2032

HB 190 extends Alabama's Railroad Rehabilitation Tax Credit program through 2032, increasing the annual credit cap from $3.7 million to $4.5 million and raising the per-mile credit amount from $3,500 to $4,100. It directly affects railroad companies owning or leasing track in Alabama by allowing them to claim tax credits covering 50% of eligible rehabilitation costs, with credits transferable at 85% value. The program is funded through sales tax revenues in the Education Trust Fund, with specific annual limits on total credits issued across the extended period.

Topics ✓ Budget & TaxesSupports Budget & TaxesBill increases tax credit caps for railroads (from $3.7M to $4.5M), expands eligible costs, and extends program through 2032, directly advancing tax relief policy.95% confidence ✗ EducationOpposes EducationFunds railroad tax credits via Education Trust Fund, diverting resources from education funding toward rail infrastructure.90% confidence ✓ TransportationSupports TransportationBill extends tax credits for railroad rehabilitation, directly funding rail infrastructure improvements under transportation policy.90% confidence

Sub-Topics Income Tax Sales Tax Tax Credits Rail

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died · Alabama · Senate Apr 7, 2026

SB 225: Income tax; certain compensation by members of the Alabama National Guard, exempt

SB 225 would exempt the first $5,000 of annual drill pay earned by Alabama National Guard members from state income tax. This bill modifies Alabama's existing tax code to specifically include National Guard drill pay under the state's income tax exemption rules, expanding a current exemption for certain military compensation. The change directly affects Alabama National Guard members who earn income from part-time service (drill pay), reducing their state tax burden on that portion of their earnings. The bill also includes minor technical updates to align the tax code language with current formatting standards.

Topics ✓ Budget & TaxesSupports Budget & TaxesExempts National Guard drill pay from state income tax, providing tax relief for military personnel, aligning with tax policy support.95% confidence

Sub-Topics Income Tax Tax Incentives

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signed · Alabama · House Apr 17, 2026

HB 341: Income tax, to exempt certain income earned by members of the Alabama National Guard

HB 341 exempts the first $5,000 of drill pay earned by Alabama National Guard members from state income tax. This directly affects part-time service members who receive compensation for training exercises (drill pay) but not active-duty military pay. The bill amends Alabama's tax code by adding a new exemption under Section 40-18-19 for this specific income, aligning with existing exemptions for other public safety personnel. It also includes minor technical updates to the tax code language for clarity, without changing other tax provisions.

Topics ✓ Budget & TaxesSupports Budget & TaxesExempts National Guard drill pay from state tax, providing targeted tax relief to public safety personnel per existing exemptions.95% confidence

Sub-Topics Income Tax

passed · Alabama · House Mar 31, 2026

HB 278: Firefighters and rescue squad members, income tax credit for training under certain conditions expanded

HB 278 makes Alabama's existing income tax credit for volunteer firefighters and rescue squad members permanent and expands it to cover three new categories: members certified at Firefighter I level, Emergency Medical Responders, and fire support persons. The credit amount varies by certification, ranging from $200 to $600 annually, depending on the specific role and training level. To qualify, members must complete 30 hours of approved annual training and submit proof through a standardized certification process to the Department of Revenue. This change applies to tax years beginning January 1, 2027, replacing the previous temporary 2023-2026 window.

Topics ✓ Budget & TaxesSupports Budget & TaxesExpands income tax credit for public safety volunteers, providing tax relief through permanent credit increases ($200-$600) for training, directly supporting tax policy for lower-income public service workers.95% confidence ✓ HealthcareSupports HealthcareExpands tax credit to Emergency Medical Responders (EMRs), directly supporting healthcare workforce development in emergency medical services.85% confidence

Sub-Topics Income Tax Tax Credits

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died · Alabama · Senate Apr 7, 2026

SB 125: Taxation; to establish an income tax credit for oyster shell recycling

SB 125 creates a state income tax credit for Alabama restaurants that donate oyster shells to approved recycling programs. Restaurants can claim a credit of $1 for every 50 pounds of shells donated, up to a maximum of $2,000 per business annually, with a total annual cap of $100,000 across all restaurants. The credit applies to tax years 2026 through 2030 and requires restaurants to maintain records for verification. This policy directly affects restaurants participating in oyster shell recycling, incentivizing them to support coastal conservation efforts through tax benefits.

Topics ✓ Budget & TaxesSupports Budget & TaxesCreates income tax credit for restaurants, providing direct tax relief as a fiscal policy to incentivize recycling programs within state tax framework.95% confidence ✓ EnvironmentSupports EnvironmentBill incentivizes oyster shell recycling to conserve marine habitats and reduce waste, directly supporting environmental conservation through resource reuse.95% confidence

Sub-Topics Income Tax Tax Credits Coastal & Flood Protection Conservation Recycling

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