HB351 Alabama 2019 Session

Summary

Primary Sponsor

Lynn Greer

Republican

Session

Regular Session 2019

Title

Deferred compensation plans, portion of income exempt from income tax, Sec. 40-18-19 am'd.

Summary

HB351 would provide Alabama residents with a 90% state income tax exemption on distributions from defined contribution deferred compensation plans, phased in from $10,000 in 2020 to $20,000 in 2021 and $30,000 from 2022 onward.

What This Bill Does

The bill amends the state income tax exemptions to create a 90% exemption for distributions from defined contribution deferred compensation plans, up to specific dollar amounts. The exemption starts at 90% up to $10,000 in 2020, increases to 90% up to $20,000 in 2021, and reaches 90% up to $30,000 in 2022 and each year after. It becomes effective immediately after the governor signs it into law, and the Department of Revenue may issue rules to implement the changes.

Who It Affects

• Resident individual taxpayers who receive distributions from defined contribution deferred compensation plans (eligible for the 90% exemption up to the specified caps).
• Nonresident individual taxpayers (not directly eligible for the new exemption; their exemptions are handled under existing rules and are prorated for Alabama-source income).

Key Provisions

• Creates a 90% exemption from Alabama state income tax for distributions from defined contribution deferred compensation plans, up to $10,000 in 2020, $20,000 in 2021, and $30,000 in 2022 and thereafter.
• Applies to resident taxpayers under Section 40-18-19 of the Code of Alabama 1975 (as amended by Act 2018-232).
• Requires the Department of Revenue to adopt rules to implement and administer the exemption.
• Effective date: immediately after passage and approval by the Governor (or otherwise becoming 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