Connect with us

Hi, what are you looking for?

State

Business, retirement tax changes to take effect Jan. 1

The changes include phasing out the business privilege tax and the exemption of $6,000 of retirement income for senior citizens.

(STOCK)
Getting your Trinity Audio player ready...

With the start of the new year, small businesses and senior citizens can expect tax breaks that begin in 2023.

With historic revenues, due in large part to federal assistance, the Alabama Legislature took action in its last session to make several changes to tax law that will relieve tax pressure on small businesses and certain individuals.

Under current law, Alabama’s business privilege tax has a minimum payment of $100 per year, but that minimum will phase out as a result of House Bill 391, enacted in April 2022. Starting in 2023, the minimum tax owed will decrease from $100 to $50. Beginning in 2024, businesses with a liability of $100 or less will no longer be required to remit a business privilege tax payment.

“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 Senate approved the bill. “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.” 

Alabama will also exempt the first $6,000 of otherwise taxable retirement income for those 65 or older, under House Bill 162.

Not all of the tax changes approved by the Legislature in its last session take effect with the change of the calendar.

Some parts of the Small Business Relief and Revitalization Act have already taken effect, but the most substantial provision exempting up to $40,000 of business personal property from the state-levied ad valorem tax is not set to take effect until October 2023.

Advertisement. Scroll to continue reading.

Jacob Holmes is a reporter at the Alabama Political Reporter. You can reach him at [email protected]

More from APR

Education

The tax renewal secures a crucial stream of funding for the next three decades.

Legislature

The legislation would exempt baby formula, baby bottles, and menstrual hygiene products, among others, from state taxes. 

News

The new officers' terms in office began on Jan. 1.

Economy

Labor costs reported as the single most important problem for business owners increased.