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Alabama Senate passes bill to eliminate “business privilege” tax

The bill would cut the minimum tax in half for the 2023 tax year and eliminate the tax altogether for subsequent years.


The Alabama Senate on Thursday approved a bill that would eliminate the state’s minimum “business privilege” tax for some corporations and other entities. 

Senate Bill 290 would eliminate those taxes, which generate approximately $23 million annually to the states general fund. The bill now heads to the House for consideration. 

 “Small businesses are the backbone of Alabama’s economy and pillars in our communities, and the last two years have been the most difficult in decades for these entities,” Sen. Tom Butler, R-Madison, said in a statement after the vote. “While our state budgets are robust, there is a real opportunity to provide substantial support by eliminating the business privilege tax, which will result in an annual $23 million tax cut for our small businesses.” 

“I am pleased that my colleagues in the Senate recognized the need to move this important piece of legislation forward, and I am eager to see this bill on Governor Kay Ivey’s desk so that we can provide relief for Alabama taxpayers and small businesses,” Butler continued. 

State law now sets those taxes based upon a taxpayer’s taxable income. The legislation would reduce the minimum tax from $100 to $50 for the 2023 tax year, and eliminate the tax altogether for subsequent years. 

President Pro Tem Greg Reed, R-Jasper, in a statement said Alabama’s strong economy has allowed for such a tax break. 

“Alabama’s economy is strong, and our receipts have increased in both the General Fund and Education budgets, presenting an opportunity to provide a tax break for taxpayers and small businesses,” Reed said. “This bill has a pretty good price tag to it as far as loss of revenue to the state’s budgets, so we have worked closely with the budget chairmen to develop this policy and consider ways to fill the gap. The Senate has prioritized support for Alabama’s businesses, specifically small businesses, and I am proud of the effort that occurred within this legislative body to deliver much-needed relief for Alabamians.”

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Eddie Burkhalter is a reporter at the Alabama Political Reporter. You can email him at [email protected] or reach him via Twitter.



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