SB231 Alabama 2021 Session

Updated Feb 26, 2026

Notable

Summary

Primary Sponsor: Will BarfootSenator
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: SB231 creates a new Alabama individual income tax deduction of up to $5,000 per year for contributions to Alabama ABLE savings accounts, starting in 2021 and sunsetting in 2025.
What This Bill Does
It allows an individual to deduct up to $5,000 of ABLE account contributions from gross income, even if they do not itemize deductions. If a nonqualified withdrawal is made, the withdrawal amount plus 10% is added back to the contributor's income in that year. Rollovers to an Alabama ABLE account are not treated as new contributions for the deduction if the rollover amounts have already been deducted. The Department of Revenue can issue rules to administer the law. The act applies to tax years beginning after December 31, 2020, and sunsets on December 31, 2025.

Who It Affects
Group 1: Individual taxpayers who contribute to Alabama ABLE savings accounts — can claim a deduction of up to $5,000 per year from gross income (no need to itemize).
Group 2: Individuals with ABLE accounts who engage in withdrawals or rollovers — nonqualified withdrawals trigger an add-back to income (withdrawal amount plus 10%), and rollover contributions are excluded from the deduction if already claimed.

Key Provisions
Adds Section 40-18-15.8 to provide an income tax deduction for ABLE contributions up to $5,000 per year, available regardless of itemized deductions.
If a nonqualified withdrawal occurs (per 529A rules), the withdrawn amount plus 10% is added back to the contributor's income in that year.
Rollover amounts to an Alabama ABLE account do not count as contributions for the deduction if a deduction has already been claimed for the rollover.
The Department of Revenue may adopt rules to administer the act.
Sunset: the act expires December 31, 2025.
Effective for tax years beginning after December 31, 2020 (start in 2021).

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