HB130 Alabama 2020 Session

Summary

Primary Sponsor

Andrew SorrellAuditor

Republican

Session

Regular Session 2020

Title

Taxation, business entities, eliminate the annual Business Privilege Tax over a ten-year period, Article 2, of Chapter 14A of Title 40 repealed on January 1, 2030, Sec. 40-14A-22 am'd.

Summary

HB 130 would phase out Alabama's annual Business Privilege Tax for all business entities over ten years, ending after the 2029 tax year.

What This Bill Does

Starting in 2020, it lowers the tax rate on net worth in Alabama for corporations, LLCs, and disregarded entities doing business in Alabama, with the rate decreasing each year through 2029. By January 1, 2030, the Business Privilege Tax would be eliminated entirely and Article 2 would be repealed. The bill keeps special rules for financial institution groups, requiring a minimum aggregate tax based on deposits and allowing group filing; these provisions exist within the phase-out period and would end when the tax is repealed.

Who It Affects

• All corporations, LLCs, and disregarded entities doing business in Alabama would compute tax liability using the net-worth times a declining rate, with the liability declining year by year until the tax ends in 2029.
• Financial institution groups (banks and similar) would face minimum aggregate tax amounts based on their Alabama deposits and may file as a group; these provisions apply during the phase-out period through 2029.

Key Provisions

• Phase-out of the annual Business Privilege Tax over ten years beginning in 2020, with elimination after tax year 2029.
• Tax base remains net worth in Alabama; tax computed as net worth times a rate that declines each year (rates shown in the bill).
• Section 40-14A-22 amended to end the tax for tax years beginning after December 31, 2029; Article 2 repealed January 1, 2030.
• Effective date of January 1, 2020; provisions are severable and state law conflicts are repealed by Section 3.
• Financial institution groups have a minimum aggregate tax based on deposits, with group filing options and joint liability; rules differ by deposit levels.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation