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Bill to exempt COVID relief payments from Alabama income tax passes House

The bill would exclude COVID relief payments from Alabama’s individual income tax.


The Alabama House of Representatives on Thursday passed legislation to make coronavirus aid non-taxable under Alabama’s income tax. House Bill 170, the Alabama Taxpayer Stimulus Freedom Act of 2021, is sponsored by state Rep. Danny Garrett, R-Trussville.

HB170 passed the Alabama House by a vote of 94 to 0. State Sen. Dan Roberts, R-Mountain Brook, is the sponsor of Senate Bill 98, the companion bill to Garrett’s HB 170, and will carry HB170 in the Senate.

Roberts said on social media:

“This priority legislation, among other tax reform measures, would ensure that federal stimulus funds derived from the CARES Act and subsequent coronavirus relief legislation are not subject to state income taxes. The Alabama House passed this 94-0 and it will be in F&T Education Senate Committee on Tuesday and on Senate Floor on Wednesday.”

Speaker of the House Mac McCutcheon, R-Monrovia, said that HB170 was one of the “priority bills that were passed in the house today.” McCutcheon said that “The Jobs Act,” which extended Alabama’s tax credits, was the other priority bill that passed the House on Thursday. McCutcheon said that the third priority bill was the COVID-19 liability bill that passed in the Senate on Thursday.

“The House will address that bill next week,” McCutcheon said.

All the members of the Legislature were tested for COVID-19 on Tuesday. One member of the House did test positive for the coronavirus. McCutcheon told reporters that the member, who has still not been identified, is “doing well,” resting at home under quarantine.

McCutcheon said that they are trying to get all of the members tested again on Tuesday. The biggest difficulty is getting the labor to do the testing. McCutcheon said that they did not want to take health care workers off of the front lines fighting COVID in order to test members of the Legislature. They used nursing students on Tuesday to do the testing and would like to do that again if that is possible.

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HB170 provides for an:

“Exclusion from Alabama individual income tax for federal tax credits, advance refunds, qualified disaster relief payments, Small Business Administration subsidy payments, Emergency EIDL grants, Targeted EIDL advances, student loans, or loan forgiveness resulting from the federal Coronavirus Aid, Relief, and Economic Security Act, Taxpayer Certainty and Disaster Relief Tax Act, or COVID-related Tax Relief Act; to provide an income and financial institution excise tax exemption for any amounts received from the Coronavirus Relief Fund; to amend Section 40-27-1, Code of Alabama 1975, to change the apportionment factor to a single sales factor; to retroactively decouple from the new federal law 26 U.S.C. § 951A relating to Global Intangible Low-Taxed Income and 26 U.S.C. § 118(b)(2); to change how a corporation limits its business interest expense deduction; and to provide that an Electing Pass-Through Entity shall be taxed at the entity level instead of its owners, members, partners, or shareholders.”

HB170 will be in the Senate Finance and Taxation Education Committee on Tuesday. 

Brandon Moseley is a former reporter at the Alabama Political Reporter.

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