The state Senate Finance and Taxation Education Committee on Tuesday gave favorable reports for two bills that would reduce state taxes for some Alabamians.
Senate Bill 18 introduced by Sen. Arthur Orr, R-Decatur, chairman of the committee, would allow those aged 65 or older who receive money from their 401K retirement account or an Individual Retirement Account, to exempt up to $10,000 of those distributions from being taxed by the state.
“It seemed to me with the high inflation that we’re seeing today, our revenues are going to benefit,” Orr said before the votes, adding he’d like to see some of those funds go back to taxpayers.
Orr said SB18 would cost the state $40 million over two years. Committee members prior to unanimously voting to give the bill a favorable report approved an amendment that makes clear IRA’s are included in the bill.
Senate Bill 19 would increase the optional standard deduction for married couples filing jointly by $1,000. It would also increase the optional standard deduction for those who are single, married filing separately and head of household by $500.
The bill would also increase the adjusted gross income range allowable for standard deduction from $33,000 to $35,000 and the adjusted gross income range allowable for dependent exemption from $20,000 to $50,000.
“It will help, in my opinion, working families,” Orr said. “Particularly as we have more inflation coming down the road.”