SB195 Alabama 2020 Session

Summary

Primary Sponsor

Steve LivingstonSenator

Republican

Session

Regular Session 2020

Title

Rural physicians and dentists, income tax credit under certain conditions, Secs.40-18-130, 40-18-131, 40-18-132 am'd.

Summary

SB195 ends the old rural physician tax credit and creates new rural physician and rural dentist income tax credits starting in 2021, with updated definitions, eligibility rules, and a certification process.

What This Bill Does

The bill terminates the existing rural physician credit after 2020. It allows 2020 claimants to continue under the old framework for the remainder of that credit period. It creates a new Division 2 credit for rural dentists and rural physicians beginning in 2021, offering a $5,000 credit for up to five consecutive years if the recipient continues to meet eligibility. It removes the hospital-ownership requirement for rural credits, defines rural community and practitioner roles, and requires practicing at least 20 hours per week in a rural area. It also requires state licensing boards to certify eligible physicians and dentists and requires the Department of Revenue to issue and administer rules for the credits, plus annual reporting by the boards.

Who It Affects

• Rural physicians and rural dentists who practice in rural communities and meet the 20 hours per week requirement; they could become eligible for a $5,000 tax credit for up to five consecutive years starting in 2021, subject to ongoing qualification.
• Physicians or dentists who previously claimed the old rural physician credit before 2021; they may receive the new credit for up to five consecutive years, reduced by the number of years they already received under the old credit.
• Rural communities designated under federal criteria (no longer required to have a rural hospital) and the individuals who practice there, since the definition and qualification criteria emphasize practice location and hours rather than hospital affiliation.
• State licensing boards (State Board of Medical Examiners and State Board of Dental Examiners) and the Department of Revenue, which will certify eligible practitioners, attach certifications to tax returns, and administer the program.
• Applicants who fail to obtain the required certificate before claiming the credit will not receive the tax credit.

Key Provisions

• Termination of the existing Division 1 rural physician credit effective for tax years ending after December 31, 2020; 2020 claimants may continue under the old credit for the remainder of their five-year period.
• Creation of Division 2 rural dentist and rural physician tax credits starting with tax year 2021; eligibility includes practicing at least 20 hours per week in a rural community and meeting defined rural criteria.
• Definitions added for rural community (federal standard), rural physician, and rural dentist; removal of the requirement that a rural community have a rural hospital.
• Annual certification requirement: rural physicians and dentists must obtain a certificate from the appropriate licensing board (or designee) before claiming the credit, and must attach the certificate to their tax return.
• Credit amount and duration: $5,000 per eligible year for up to five consecutive years, as long as the practitioner continues to qualify; if the practitioner previously claimed under the old program, the new five-year period is shortened by the number of years previously claimed.
• Limitations on eligibility: a practitioner who has previously practiced in a rural community before 2021 must return to rural practice after at least three years away to qualify again.
• Post-claim rules: once a rural dentist or physician completes five consecutive years of credit, they cannot claim additional credits under this act; skipping a year disqualifies future credits.
• Reporting and rulemaking: licensing boards must file annual informational reports on those receiving the credit; the Department of Revenue will adopt necessary rules to implement the division.

AI-generated summary using openai/gpt-5-nano on Feb 23, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation