HB476 Alabama 2015 Session

Summary

Primary Sponsor

John F. Knight Jr

Democrat

Session

Regular Session 2015

Title

Income tax, Alabama Individual Income Tax Reform Act of 2015, subject to repeal of federal income tax credit, increases deductions and creates State Earned Income tax credit, Secs. 40-18-15, 40-18-19 am'd.

Summary

Alabama HB476 would replace state deductions with federal-style amounts and add a state earned income tax credit, contingent on a constitutional amendment repealing the federal tax deduction.

What This Bill Does

If passed, the bill would set Alabama's standard deduction and personal exemptions to match federal amounts, effectively aligning Alabama's tax calculations with federal rules. It would create a state earned income tax credit worth 10% of the federal EITC for eligible taxpayers, with refunds possible if the credit exceeds tax liability. The act would take effect only after the constitutional amendment repealing the federal tax deduction on Alabama returns is ratified, and would apply to tax years after 2016 if ratified; it also makes detailed changes to various deduction rules to mirror federal tax law.

Who It Affects

• Group 1: Individual Alabama resident taxpayers (and nonresidents with Alabama-sourced income) whose tax liability could change due to federal-style standard deductions and exemptions and the new state EITC.
• Group 2: Low- to moderate-income workers who would be eligible for the Alabama earned income tax credit (up to 200% of the federal poverty level, with limits on disqualified income), potentially increasing refunds or reducing state taxes.

Key Provisions

• Standard deductions and personal exemptions would be equal to those allowed under federal income tax law.
• A new Alabama Earned Income Tax Credit would be created, equal to 10% of the taxpayer's federal EITC for the same year, with refundable treatment if the credit exceeds tax liability.
• Eligibility for the state EITC would be limited to qualified taxpayers with federal adjusted gross income up to 200% of the federal poverty level and within federal-disqualification limits.
• The act would become effective only if a specified constitutional amendment repealing the deduction of federal income tax payments on Alabama returns is ratified, applying to tax years beginning after December 31, 2016 if ratified.
• Sections amending 40-18-15 and 40-18-19 would align Alabama's deductions and exemptions with federal rules and establish the optional standard deduction framework (20% of AGI or set dollar amounts, with special rules for different filing statuses).

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

Subjects

Taxation