HB257 Alabama 2021 Session

Summary

Primary Sponsor

Arnold MooneyRepresentative

Republican

Session

Regular Session 2021

Title

Income tax, exclusion for federal tax credits, advance refunds, qualified disaster relief payments, subsidies, grants, student loans, or loan forgiveness from federal CARES Act and subsequent federal COVID relief legislation, exemption from income and financial institution excise tax for amounts from the Coronavirus Relief Fund.

Summary

HB257 would exclude many federal CARES Act and COVID relief payments from Alabama taxes and would exempt related loan forgiveness and relief funds from state taxation.

What This Bill Does

It would exclude from Alabama individual income tax federal tax credits, advance refunds, SBA subsidy payments, Emergency EIDL grants, Targeted EIDL advances, student loan payments, and qualified disaster relief payments that come from the CARES Act or related relief acts. It would exempt amounts received from the Coronavirus Relief Fund from Alabama income tax and from the financial institution excise tax. It would exclude from Alabama taxes the cancellation of indebtedness income from Paycheck Protection Program (PPP) loan forgiveness, aligning state tax treatment with federal relief programs. It would treat subsidies and grants such as Emergency EIDL Grants, Shuttered Venue Grants, and Targeted EIDL Advances as tax-exempt for both income and financial institution taxes, and would adjust how these funds affect deductible expenses and federal tax deductions to mirror federal rules.

Who It Affects

• Individual Alabama taxpayers who receive CARES Act or related COVID relief payments would not owe state income tax on those payments (and may see changes in how these funds affect federal deduction calculations).
• Businesses, lenders, and nonprofit entities that receive PPP loan forgiveness, EIDL grants, Shuttered Venue Grants, Targeted EIDL Advances, SBA subsidies, or Coronavirus Relief Fund payments would be exempt from Alabama income tax and financial institution tax on those amounts, and these funds would not count against deductible expenses or federal deduction calculations.

Key Provisions

• Excludes from Alabama individual income taxation federal tax credits, advance refunds, SBA subsidy payments, Emergency EIDL grants, Targeted EIDL advances, student loan payments, or qualified disaster relief payments resulting from the CARES Act, the RELIEF Act, or related COVID relief acts.
• Provides an income and financial institution excise tax exemption for amounts received from the Coronavirus Relief Fund.
• Excludes from Alabama taxes the cancellation of indebtedness income from PPP loan forgiveness to align with federal relief tax treatment; and prevents these amounts from reducing deductible expenses or affecting federal deduction calculations as described in RELIEF Act provisions.
• Exempts from Alabama taxes subsidies and grants related to covered loans, Emergency EIDL Grants, Shuttered Venue Grants, and Targeted EIDL Advances, with tax treatment matched to federal exemptions and corresponding deduction rules.
• The Department of Revenue may adopt rules to implement and administer the act, and the act becomes effective for tax years ending after the enactment of the CARES Act and related federal laws.

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