HB243 Alabama 2021 Session

Summary

Primary Sponsor

Danny GarrettRepresentative

Republican

Session

Regular Session 2021

Title

Taxation, individual income tax, income tax deduction up to five thousand dollars per annum for contributions made to Alabama Achieving a Better Life Experience (ABLE) savings account, Sec. 40-18-15.8 added

Summary

HB243 would create a state income tax deduction of up to $5,000 per year for contributions to Alabama ABLE savings accounts, with rules for withdrawals and rollovers.

What This Bill Does

It introduces a deduction of up to $5,000 per year for contributions to Alabama ABLE savings accounts, available whether or not you itemize your deductions. The deduction applies to contributions made on or after January 1, 2021. If you make a nonqualified withdrawal, you must add back the withdrawal amount plus 10% of that amount to your income in the year the withdrawal is distributed. Rollover contributions are not eligible for the deduction if a deduction for the rollover has already been claimed, and the Department of Revenue may set rules to administer the program.

Who It Affects

• Individual taxpayers in Alabama who contribute to an Alabama ABLE savings account and can take the deduction (up to $5,000 per year).
• Alabama ABLE account holders (beneficiaries) and their families, who must follow withdrawal and rollover rules related to the deduction.

Key Provisions

• Adds Section 40-18-15.8 to allow an income tax deduction of up to $5,000 per year for contributions to Alabama ABLE savings accounts.
• Deduction is available regardless of whether the taxpayer itemizes deductions and applies to contributions made on or after January 1, 2021.
• If a nonqualified withdrawal is made, the withdrawal amount plus 10% of that amount must be added back to the taxpayer's income in the year of distribution.
• Rollover amounts into an Alabama ABLE savings account do not count toward the deduction if a deduction for the rollover has already been claimed.
• The Department of Revenue may adopt rules to administer the act.
• The act becomes effective for tax years beginning after December 31, 2020.

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