HB3 Alabama 2020 Session

Summary

Primary Sponsor

Mike Holmes

Republican

Session

Regular Session 2020

Title

Taxation, individual and corporate tax structure revised, specific tax rate, reduction of rate under certain conditions, const. amend.

Summary

HB3 would amend Alabama's constitution to repeal several major taxes and replace them with a single rate consumption tax.

What This Bill Does

If passed, it would repeal the business privilege tax, inheritance and estate taxes, personal income tax, corporate net income tax, and the federal tax deduction from gross income (effective January 1, 2020). It would require the Legislature to create general laws to implement a broad-based, single-rate consumption tax that replaces most state taxes (sales, rents, lodgings, utilities, corporate and individual income taxes, mortgages, financial institutions tax, insurance premium tax, etc.) and transfers the revenue to fund state and local governments. The amendment would be decided by voters at the next statewide election.

Who It Affects

• Individuals and households would no longer pay personal income tax or inheritance/estate taxes and would instead pay a single-rate consumption tax on spending.
• Businesses and local governments would lose taxes like corporate income tax and business privilege tax, with revenue raised instead by the new consumption tax to fund state and local government.

Key Provisions

• Repeals: business privilege tax (Section 229), inheritance and estate taxes (Amendment 23), income tax (Amendment 25), corporate net income tax (Amendment 212), and federal income tax deduction from gross income (Amendment 225).
• Requires Legislature to enact general laws to implement a single-rate consumption tax, replacing all listed taxes and funding state/local governments, with repeal taking effect Jan 1, 2020; election to approve the amendment at the next statewide election.

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

Subjects

Constitutional Amendments