SB483 Alabama 2010 Session

Summary

Primary Sponsor

Hinton Mitchem

Democrat

Session

Regular Session 2010

Title

Income tax, certain retirement plans from certain colleges, exempt, Sec. 40-18-19 am'd.

Summary

The bill would exempt retirement income from certain qualified higher education institutions from Alabama state income tax.

What This Bill Does

It amends Section 40-18-19 to add an exemption for retirement income from an institution of higher education that meets criteria. The exemption would apply to retirement payments from such institutions’ plans, including those under the Teachers' Retirement System and Employees' Retirement System and, starting January 1, 2011, to payments from higher education retirement plans that are 403(b) arrangements with contributions by both retiree and employer. Existing exemptions for firefighters and police retirement income, and for U.S. government and other federal retirement funds, remain in the law. Nonresident taxpayers would receive a proportional exemption based on the share of their income earned in Alabama.

Who It Affects

• Alabama resident retirees who receive retirement income from qualifying higher education institutions would have that income exempt from state income tax.
• Nonresident taxpayers with Alabama-sourced retirement income from qualifying higher education institutions would receive a proportional exemption based on Alabama-source income.

Key Provisions

• Adds exemption from state income tax for retirement income from an institution of higher education that meets criteria.
• For higher education related retirement income, the exemption covers retirement allowances, pensions and annuities; includes plans approved by the Teachers' Retirement System and Employees' Retirement System with exempt status.
• Beginning January 1, 2011, confirms exemption for payments from higher education retirement plans under a 403(b) arrangement where the plan is established under 403(b) and both retiree and employer contribute, to the extent payments would be taxable federally.
• Retains existing exemptions for firefighter and police retirement income, including the first 8,000 exemption for certain cases and eventual full exemption from 1991 onward.
• Keeps exemptions for U.S. government and other federal retirement funds.
• Provides an exemption for income from defined benefit plans under 414(j) for payments that would be taxable federally, effective January 1, 1991.
• Allows exemption for money from PACT/ACES funds used to pay for qualified higher education expenses or refunded without penalty under 529 rules, effective January 1, 1998.
• Nonresident exemptions are prorated in the same way as other personal exemptions, based on Alabama-source income.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation