SB6 Alabama 2010 1st Special Session

Summary

Primary Sponsor

Tammy Irons

Democrat

Co-Sponsors

Jimmy HolleyHarri Anne SmithShadrack McGillDick BrewbakerPaul BussmanBill HoltzclawPhillip W. WilliamsClay ScofieldTom WhatleyVivian Davis FiguresScott BeasonGeorge M. “Marc” KeaheyWilliam “Bill” M. BeasleyCam WardGerald H. AllenPaul SanfordRusty GloverQuinton RossRoger Bedford, Jr.Priscilla DunnArthur OrrMark Slade Blackwell

Session

First Special Session 2010

Title

Governor, a member of Governor's family, or a member of the Governor's cabinet, prohibited from contracting, lobbying, and working for companies that contract or lobby with the Executive Branch for two years following departure from public service, Sec. 36-25-19 am'd.

Summary

SB6 would create a catastrophe savings account to help Alabama homeowners cover deductibles and other uninsured losses from windstorm–related events, with tax incentives for deposits.

What This Bill Does

It establishes a catastrophe savings account for residential property to cover insurance deductibles and uninsured losses from catastrophic windstorm events. Taxpayers may contribute up to specified limits based on their deductible, and those contributions are deductible from Alabama income tax while the account’s interest is tax-exempt. Distributions used for qualified catastrophe expenses are not included in income, but non-qualified distributions may be taxed and subject to an additional 2.5% tax unless certain exemptions apply. The Department of Revenue would implement rules, and the act takes effect immediately after passage.

Who It Affects

• Homeowners who own a primary residence in Alabama and choose to contribute to a catastrophe savings account; they benefit from a state income tax deduction for contributions and tax-exempt interest.
• Self-insured homeowners who opt not to obtain insurance on their residence; they may contribute up to a higher limit, not exceeding the home's value.
• Recipients and heirs, including surviving spouses; distributions are generally included in income for the recipient, with specific rules for surviving spouses and subsequent beneficiaries.

Key Provisions

• Defines a catastrophe savings account to cover insurance deductibles and uninsured losses from hurricane, rising floodwaters, or other catastrophic windstorm events.
• Allows a state income tax deduction for contributions to the catastrophe savings account and exempts the account’s interest from state tax.
• Protects the account from attachment, levy, garnishment, or other legal process in the state.
• Sets contribution limits: (a) deductible ≤ $1,000 -> max $2,000; (b) deductible > $1,000 -> max lesser of $15,000 or 2 × deductible; (c) self-insured (no insurance) -> up to $250,000, not exceeding the home’s value.
• If contributions exceed limits, excess must be withdrawn and treated as Alabama income in the year of withdrawal.
• Distributions used for qualified catastrophe expenses are not included in income; non-qualified distributions may be included and are subject to a 2.5% additional tax unless exemptions apply.
• Specific exemptions remove the additional 2.5% tax in certain cases (e.g., no longer owning a qualifying residence, or distributions tied to age/ account conformance).
• If the account owner dies, distributions to recipients are included in income, except if the recipient is the surviving spouse; after the surviving spouse dies, the account is included in the income of the next recipient.
• Department of Revenue can issue rules to implement and administer the act.
• Effective date: immediately after passage and approval.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Public Officers and Employees