SB386 Alabama 2021 Session

Summary

Primary Sponsor

Dan RobertsSenator

Republican

Co-Sponsor

Arthur Orr

Session

Regular Session 2021

Title

Income taxation, credit to owner, member, partner, shareholder of pass-through entity

Summary

SB386 creates a personal tax credit for owners, members, partners, or shareholders of electing pass-through entities equal to their share of the entity’s Alabama income tax for the year.

What This Bill Does

For tax years starting in 2021, eligible individuals report their share of the pass-through entity’s income and accompanying tax under Alabama law. These owners get a credit equal to their pro rata or distributive share of the Alabama income tax paid by the electing pass-through entity for that tax year. The credit reduces the owner's Alabama tax liability and supersedes conflicting tax liability provisions in existing statutes. The Department of Revenue can adopt rules to implement and administer the credit, and the act takes effect immediately after passage.

Who It Affects

• Owners, members, partners, or shareholders of electing pass-through entities, who would receive a credit equal to their share of the entity’s Alabama income tax.
• Electing pass-through entities themselves, which must report income and enable the credit for owners.

Key Provisions

• Tax years beginning on or after January 1, 2021: owners must report pro rata or distributive share of the entity's income under the specified sections.
• Owners are entitled to a credit equal to their pro rata or distributive share of Alabama income tax paid by the electing pass-through entity for the year.
• Any conflicting liability provisions in Chapters 16 or 18 of Title 40 are superseded by this act.
• Department of Revenue may adopt rules to implement and administer the credit, and the act becomes effective immediately after passage and approval.

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