HB23 Alabama 2017 Session

Summary

Primary Sponsor

Lynn Greer

Republican

Session

Regular Session 2017

Title

Taxation, defined contribution deferred compensation plans, certain percentage of benefits exempt from state and local income taxes, Revenue Dept. authorized to adopt administrative rules, Sec. 40-18-19 am'd.

Summary

HB23 would start exempting up to 90% of annual income from defined contribution deferred compensation plans from Alabama state and local income taxes, phased in from 20% in 2018 to 90% by 2022.

What This Bill Does

The bill adds a new exemption to Alabama's income tax rules for income from defined contribution deferred compensation plan benefits. The exemption is phased in over five years: 20% in 2018, 40% in 2019, 60% in 2020, 80% in 2021, and 90% from 2022 onward. The Department of Revenue would be allowed to issue rules to implement and administer this exemption. The act would take effect immediately after passage.

Who It Affects

• Resident individual taxpayers who receive annual income from defined contribution deferred compensation plans and would see an increasing portion of that income exempt from state and local taxes.
• Nonresident individual taxpayers with Alabama-source income, who would receive a proportionate portion of the exemption based on how much of their income comes from Alabama.

Key Provisions

• Adds a new exemption in Section 40-18-19 for annual income from defined contribution deferred compensation plan benefits, with a phased-in exemption: 20% (2018), 40% (2019), 60% (2020), 80% (2021), and 90% (2022 onward).
• Nonresident taxpayers receive a proportionate exemption based on the share of their Alabama-source income (as governed by existing nonresident exemption rules).
• The Department of Revenue may promulgate rules necessary to implement and administer the new exemption.
• The act becomes effective immediately after it is signed into law.

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