By Brandon Moseley
Alabama Political Reporter
Thursday, April 6, 2017, the Alabama House of Representatives approved a measure to create a simplified tax form option for Alabama income tax filers similar to the federal 1040EZ. House Bill 346 was sponsored by State Representative Chris Blackshear (R-Smiths). The bill would also allow certain filers who forego deductions to receive a tax cut.
Rep. Blackshear said in a statement that, “Creation of this new, simplified form is a victory for taxpayers who utilize it because they can finish their taxes within minutes with no complicated calculations, and it is a victory for the state because it brings added efficiency and reduces the man hours needed to process tax returns. At the same time, it rewards taxpayers who use the form and do not claim deductions by providing them with a tax cut.”
HB346 would create a 40EZ state income tax form that would be completely optional and voluntary and available for use by full-time Alabama residents earning less than $100,000 annually and claiming no non-wage income. Both single taxpayers and those who are married filing jointly would be able to utilize the new form.
Rep. Blackshear said that the form will be particularly beneficial for taxpayers who have no dependents and claim no itemized deductions or tax credits. Blackshear also claimed that it could also reduce the threat of identity theft associated with filing state tax returns.
In return for foregoing itemized deductions and credits, single filers using the state’s new 40EZ form would claim a standard deduction of $2,250 versus the $2,000 standard deduction claimed by those using the regular form. For those who file as married filing jointly they would use a $4,500 standard deduction versus the $4,000 deduction used by married couples filing the standard Alabama Form 40.
According to the fiscal note attached to the bill implementation would reduce annual revenues in the roughly $4.6 billion Education Trust Fund (ETF) by $600,000 a year. Some supporters disputed that on the floor arguing that by making filing easier the state would actually pick up some money from people not filing now. All state income taxes are earmarked for the ETF.
The bill now moves on to the Senate for their consideration.