SB475 Alabama 2015 Session

Updated Feb 27, 2026

Notable

Summary

Primary Sponsor: Trip Pittman
Republican
Session: Regular Session 2015
Title: Privilege or license tax on a contractors' gross receipts, certain exemptions eliminated, distrib. of proceeds further provided for, Sec. 40-23-50 am'd.
Summary: SB475 would remove local governments' exemption from Alabama's contractor gross receipts tax and specify how the resulting revenue is distributed, while imposing a 5% tax on gross receipts from certain contracting work.
What This Bill Does
It imposes a 5% tax on gross receipts from contracting to construct public highways, roads, bridges, or streets. It eliminates the exemption for contracts with counties, incorporated cities, and towns, so those contracts would be taxed (with limited exceptions noted in the text). It defines gross receipts as amounts earned from performing such contracts, and states that amounts paid under contractual escalation provisions are not taxed. It also sets a detailed distribution plan for the tax proceeds after administrative costs, directing funds to various state accounts and programs. The Department of Revenue would collect and enforce the tax, with similar authority as the state sales tax statutes. The act takes effect September 1, 2015.

Who It Affects
Contractors who perform construction work on public highways, roads, bridges, or streets, especially those who contract with counties, cities, or towns (local governments).
State funds and programs that receive tax revenue (Pensions and Security Trust Fund and Alabama Special Mental Health Fund) as well as other designated distribution recipients under the new revenue schedule.

Key Provisions
A 5% privilege or license tax on gross receipts from contracting to construct public highways, roads, bridges, or streets, where gross receipts are amounts earned from performing such contracts.
Gross receipts include only amounts earned from performance of those contracts; amounts paid under contractual escalation provisions for cost increases are not taxed.
Local government contracts (with counties, cities, or towns) would no longer be exempt from the tax, effectively expanding the tax base to include these contracts (subject to the act’s specific exceptions in the text).
proceeds distribution: after admin costs, the first $41,000,000 goes 15% to the Pensions and Security Trust Fund and 85% to the Alabama Special Mental Health Fund; the next $54,000,000 is distributed per Section 40-17-223; any remaining funds are distributed with 56.5% to Section 40-17-223, 15.6% to the Pensions and Security Trust Fund, and 37% to the Alabama Special Mental Health Fund.
Administration and enforcement by the Department of Revenue, with powers and procedures aligned to those used for the state sales tax statutes, including liens and civil actions to collect the tax.
Effective date: September 1, 2015.

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