HB162 Alabama 2021 Session

Summary

Primary Sponsor

Kyle South

Republican

Co-Sponsor

Steve Clouse

Session

Regular Session 2021

Title

Lease tax exemptions, to allow lessor to pass lease tax on to lessee, with exceptions, to provide for a lease tax exemption for lease transactions lasting 180 days or more with certain entities, and make technical revisions to code, Secs. 40-12-222, 40-12-223 am'd.

Summary

HB162 would allow lessors to pass lease taxes to lessees (with exceptions) and create 180-day lease tax exemptions for specific entities, updating Alabama's lease tax rules.

What This Bill Does

It amends the lease tax law to remove the restriction that a lessor may not pass the lease tax to a lessee, allowing pass-through in most cases with taxes still counted as part of gross proceeds; there are exceptions for government entities where the pass-through must include both tax and leasing fee. It adds a lease exemption for long-term leases lasting at least 180 days in certain cases, so the gross proceeds from those leases would be exempt from the tax if the conditions are met (notably including specific 180-day iron and steel industry leases with detailed ownership and use rules). It adds another 180-day exemption for motor vehicle leases with government entities (federal, state, or local), public schools, or other entities eligible for federal sales tax exemptions, where the lease must last at least 180 days. It makes nonsubstantive technical revisions to update the code language to current style and sets the law to take effect on the first day of the third month after it becomes law.

Who It Affects

• Lessor businesses that lease or rent tangible property, because they could pass lease taxes to lessees and will be subject to new 180-day exemption opportunities.
• Lessee groups, including government entities (federal, state, local), public schools, and certain industries like iron and steel, because these long-term leases may be exempt from the lease tax under the new provisions.

Key Provisions

• Change to allow lessors to pass lease taxes to lessees, with the tax amounts included in gross proceeds and with specific exceptions for government entities where pass-through must include both tax and leasing fee.
• New 180-day exemption for certain iron and steel industry leases that become binding within 180 days after the act's effective date, subject to conditions about ownership, lease term, and use.
• New 180-day exemption for motor vehicle leases lasting at least 180 days with federal/state/local government bodies and public schools (or other federally tax-exempt entities) where the lease qualifies under the provision.
• Nonsubstantive technical revisions to update language and an effective date of the first day of the third month after passage.

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

Subjects

Lease Tax