HB63 Alabama 2016 Session

Summary

Primary Sponsor

Lynn Greer

Republican

Session

Regular Session 2016

Title

Taxation, defined contribution deferred compensation plans, 90 percent of income exempt from tax, Sec. 40-18-19 am'd.

Summary

The bill would exempt 90 percent of income from defined contribution deferred compensation plans from Alabama state income tax by amending the exemptions in Section 40-18-19.

What This Bill Does

It adds a new exemption: 90% of income received as a benefit from a defined contribution deferred compensation plan would be exempt from state income tax for resident taxpayers, starting with tax year 2016. The remaining 10% of that income would still be subject to state income tax. The change is made by amending Section 40-18-19 to include this exemption among the listed exemptions for residents; nonresidents’ treatment remains governed by the existing proportional personal exemptions, and the bill does not specify a nonresident 90% exemption. The act would take effect immediately after passage and the Governor’s approval.

Who It Affects

• Resident individual taxpayers who receive income from defined contribution deferred compensation plans would have 90% of that income exempt from Alabama income tax.
• Nonresident individual taxpayers: would receive a proportionate share of personal exemptions as determined by their Alabama-source income, and the bill does not explicitly grant the 90% exemption for defined contribution plan income to nonresidents.

Key Provisions

• Adds a new exemption: Beginning January 1, 2016, 90 percent of the income received as a benefit from a defined contribution deferred compensation plan is exempt from Alabama state income taxation (Section 40-18-19(a)(12)).
• The exemption is incorporated into the list of exemptions allowed to resident taxpayers under Section 40-18-19(a).
• Effective date: The act becomes effective immediately following passage and Governor’s approval.

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