HB35 Alabama 2021 Session

Summary

Primary Sponsor

Andy WhittRepresentative

Republican

Session

Regular Session 2021

Title

Taxation, income taxes, federal Coronavirus Aid, Relief, and Economic Security Act, excluded from Alabama individual income taxation

Summary

HB35 would exclude certain CARES Act-related amounts from Alabama taxes, including individual tax credits/advances and PPP loan forgiveness, and adjust related deduction rules.

What This Bill Does

It excludes from Alabama individual income tax any federal tax credits or advance refunds received under the CARES Act (IRC §6428). It excludes from Alabama income tax the cancellation of indebtedness income from forgiveness of PPP loans under the CARES Act, and extends similar exemptions to the related Alabama financial institution excise tax and Alabama corporate income tax as applicable to federal tax treatment. For the 2020 tax year, these CARES Act amounts are also excluded from calculations used to determine the federal income tax deduction under Alabama law (40-18-15) and from related federal deduction calculations under Title 40.

Who It Affects

• Alabama individual income taxpayers who received CARES Act tax credits or advance refunds, who would not owe state tax on those amounts.
• Small business owners with PPP loan forgiveness, who would not owe Alabama income tax on forgiven debt, with similar exemption effects for financial institutions and related deductions.

Key Provisions

• Exclude CARES Act federal tax credits or advance refunds (IRC §6428) from Alabama individual income taxation.
• For taxable year 2020, exclude CARES Act credits or advances from the calculation of the federal income tax deduction under Alabama law (40-18-15).
• Exclude cancellation of indebtedness income from PPP loan forgiveness under CARES Act Section 1106 from Alabama individual income tax; exempt from Alabama financial institution excise tax and income tax to the same extent as federal tax exemption.
• Do not treat funds exempt from federal tax as reducing deductibility of otherwise deductible expenses (e.g., payroll, utilities, mortgage interest, rent) for Alabama purposes, to the same extent as federal treatment.
• Exclude these amounts from calculations used to determine federal income tax deductions under Title 40 Chapters 16 and 18.
• Effective date: immediately after the Governor signs the act.

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