SB274 Alabama 2021 Session

Summary

Primary Sponsor

Bobby D. SingletonSenator

Democrat

Co-Sponsors

Greg AlbrittonGerald H. AllenWill BarfootWilliam “Bill” M. BeasleyTom ButlerClyde ChamblissDonnie ChesteenLinda Coleman-MadisonChris ElliottVivian Davis FiguresSam GivhanGarlan GudgerJimmy HolleyAndrew JonesSteve LivingstonDel MarshJim McClendonTim MelsonArthur OrrRandy PriceGreg J. ReedDan RobertsClay ScofieldRodger SmithermanLarry StuttsJ.T. WaggonerTom WhatleyJack W. Williams

Session

Regular Session 2021

Title

Covid-19 Recovery Capital Credit Protection Act of 2021, created, employment and wage requirements for qualifying projects extended, compensation amounts for exemption purposes increased, Sec. 40-18-19.1 am'd.

Summary

SB274 updates Alabama's COVID-19 recovery protections by extending capital credit employment rules, easing penalties for pandemic-affected projects, and raising tax exemptions for severance and CARES Act unemployment benefits through 2021.

What This Bill Does

It extends the time allowed to meet employment and wage requirements for approved capital credit projects affected by COVID-19 to up to two years for projects placed into service in 2019–2021. It provides relief from disqualification and reduces penalties if COVID-19 was the main cause of any shortfall, with penalties changing to a 100% of prior year credit amount (gradually reduced by 20% for each preceding year in a five-year window) for years starting in 2022 or later. It raises the state income tax exemption for severance, unemployment compensation, termination pay, or related income from $25,000 to $50,000 per tax year (with CARES Act unemployment benefits exempt for 2020–2021), and disqualifies exemptions for misconduct; rules to implement the act will be adopted by the Department of Revenue, and the act takes effect immediately after passage.

Who It Affects

• Approved project entities and their qualifying projects in the Capital Credit Program, especially those placed into service in 2019–2021 and affected by COVID-19
• Employees receiving severance, unemployment compensation, termination pay, or CARES Act unemployment benefits, and taxpayers claiming these exemptions

Key Provisions

• Extends the initial employment and wage compliance window for qualifying projects placed into service in 2019–2021 to up to two years if affected by COVID-19.
• If COVID-19 is the primary cause, a project’s failure to meet annual employment and wage requirements for tax years after 2019 but before 2022 will not cause disqualification from the capital credit program.
• For years ending before January 1, 2022, certain forfeiture penalties for failing to maintain employment and wage requirements are waived; for tax years beginning on or after January 1, 2022, penalties become 100% of the prior year’s capital credits, with a 20% reduction for each preceding year within a five-year period.
• Amends Section 40-18-19.1 to raise the tax-exempt amount for severance, unemployment compensation, termination pay, or related income from $25,000 to $50,000 per tax year (limited to actual payments but not exceeding $50,000).
• For 2020 and 2021, unemployment compensation received under the CARES Act is exempt from state, county, and municipal taxes, regardless of the $50,000 cap.
• An employee terminated for misconduct is not eligible for the exemption provided in this section.
• The Department of Revenue will adopt rules to administer and implement the act, which becomes effective immediately after passage.

AI-generated summary using openai/gpt-5-nano on Feb 23, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Revenue Department