SB43 Alabama 2015 1st Special Session

Summary

Primary Sponsor

Bill Hightower

Republican

Session

First Special Session 2015

Title

Taxation, individual and corporate tax structure revised, specific tax rate, reduction of rate under certain conditions, const. amend.

Summary

This bill would amend Alabama’s constitution to replace the current income tax with a simple flat tax for individuals and a separate flat tax for corporations, repealing existing tax provisions.

What This Bill Does

It repeals existing income tax amendments (Amendments 25, 212, and 225). It establishes a 3.20% flat tax on individuals' Alabama net income and a 4.59% flat tax on Alabama taxable income for corporations, effective January 1, 2017. It defines Adjusted Gross Income and Net Income, provides an exemption for income earned in other jurisdictions, and allows certain credits and deductions only through general laws. The Legislature would implement the details by general laws, with an 80% vote in each house required for any credits, deductions, or exemptions, and there are specific rules about net operating losses and corporate income apportionment.

Who It Affects

• Individuals who are residents of Alabama or nonresidents who perform personal services, transact business, or own property in Alabama would be taxed at a 3.20% rate on their Alabama net income, with the option to exclude income taxed by other jurisdictions.
• Corporations that are subject to Alabama tax would pay 4.59% of Alabama taxable income, with income allocated/apportioned between states; the tax does not apply to certain corporations (those that elect not to be subject to federal income tax, insurance companies, and financial institutions).

Key Provisions

• Repeals Amendments 25, 212, and 225 of the Alabama Constitution, effective January 1, 2017.
• Imposes a 3.20% flat tax on individuals' Alabama net income and a 4.59% flat tax on Alabama taxable income for corporations.
• Defines Adjusted Gross Income and Net Income for tax purposes and includes an exemption for income earned in other jurisdictions.
• Allows credits, deductions, or exemptions only through general laws, with an 80% vote in each legislative chamber required; only one credit, exemption, or deduction per law.
• Corporations may apportion and allocate income under existing rules; certain corporate types are exempt from the new tax (insurance companies, financial institutions, and those electing not to be subject to federal income tax).
• Net operating loss rules differ by taxpayer: individuals generally cannot carry net operating losses forward/backward; corporations may carry forward pre-amendment NOLs and capital losses.
• The Legislature is empowered to enact general laws to implement the amendment.

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

Subjects

Constitutional Amendments