SB409 Alabama 2015 Session

Summary

Primary Sponsor

Bill Hightower

Republican

Session

Regular Session 2015

Title

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

Summary

SB409 would replace Alabama's income tax with a flat-rate system for individuals and corporations, repeal existing tax amendments, and outline how credits, deductions, and implementation would work.

What This Bill Does

If enacted, the amendment would repeal three existing constitutional tax provisions and establish a personal tax rate of 2.75% on adjusted gross income for residents (and for nonresidents with Alabama income) plus a 2.75% tax on interest from out-of-state obligations. It would set a corporate tax rate of 4.59% on federal taxable income, with income apportioned to Alabama as required. It would also create income exclusions for earnings taxed in other jurisdictions, limit most deductions and credits to general laws, and require new laws to implement the changes, including loss carryforwards and apportionment methods.

Who It Affects

• Individuals who are Alabama residents or who earn income from Alabama; they would pay a flat 2.75% tax on adjusted gross income and may exclude income earned in other jurisdictions, with limited deductions and credits.
• Corporations doing business in Alabama or earning income from Alabama; they would pay a flat 4.59% tax on federal taxable income, must apportion income as required, and face new rules about losses, deductions, and credits.

Key Provisions

• Repeals Amendment 25, Amendment 212 (as amended by Amendment 662), and Amendment 225 of the Alabama Constitution, effective January 1, 2017.
• Imposes a personal income tax of 2.75% of adjusted gross income on residents and nonresidents with Alabama-sourced income.
• Imposes an additional 2.75% tax on interest from obligations of states other than Alabama.
• Imposes a corporate income tax of 4.59% of corporate taxable income, with mandatory apportionment when income is not all from Alabama; corporations that elect not to be subject to federal income tax are excluded.
• Excludes from adjusted gross income any income taxed in another jurisdiction and prohibits income prohibited from being taxed by federal law.
• Prohibits certain corporate deductions for net operating losses and depletion for some cases, allows carryforward of pre-amendment losses, and preserves other deductions/credits in effect at ratification.
• Gives the Legislature authority to set different income apportionment bases by general law and to create credits, deductions, or exemptions only by general law (requiring an 80% vote in each house), with each law containing only a single such credit, exemption, or deduction.
• Requires the Legislature 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