SB98 Alabama 2021 Session

Summary

Primary Sponsor

Dan RobertsSenator

Republican

Co-Sponsors

Will BarfootTom ButlerChris ElliottSam GivhanGarlan GudgerDel MarshTim MelsonArthur OrrShay ShelnuttBobby D. SingletonJ.T. Waggoner

Session

Regular Session 2021

Title

Taxation, certain tax credits, advance refunds, and other economic relief payments under the CARES Act excluded from income taxation, Alabama Taxpayer Stimulus Freedom Act of 2021, Sec. 40-27-1 am'd.

Summary

SB98 would exempt COVID-19 relief funds from Alabama taxes, reform corporate taxation rules, and allow entity-level taxation for some pass-through businesses.

What This Bill Does

If enacted, the bill would exclude federal CARES Act and related COVID-relief payments from Alabama individual income tax and from certain corporate and financial institution taxes. It would also exempt Coronavirus Relief Fund payments from Alabama taxes, exclude PPP loan forgiveness from Alabama tax, switch corporate tax apportionment to a single sales factor, decouple Alabama from GILTI, and allow Electing Pass-Through Entities to be taxed at the entity level. Additionally, it creates new provisions tied to the Multistate Tax Compact, modifies certain interest expense rules, and adds new sections to implement these changes with specific effective dates.

Who It Affects

• Individual Alabama taxpayers would not have to include CARES Act and other COVID-19 relief payments in their Alabama taxable income.
• Businesses in Alabama, including corporations and pass-through entities, would face new tax rules such as single-sales-factor apportionment and the option for pass-throughs to be taxed at the entity level, along with adjustments related to GILTI and interest deductions.

Key Provisions

• Excludes from Alabama individual income tax federal tax credits, advance refunds, SBA subsidy payments, Emergency EIDL grants, Targeted EIDL advances, student loan payments, and other COVID-related relief payments authorized by CARES Act, Taxpayer Certainty and Disaster Relief Tax Act, or related acts.
• Exempts from Alabama income tax and financial institution excise tax amounts received from the Coronavirus Relief Fund.
• Excludes from Alabama income tax and financial institution excise tax small business loans forgiven under the Paycheck Protection Program (PPP).
• Changes the corporate income tax apportionment method from a three-factor formula with double-weighted sales to a single sales-factor formula.
• Decouples Alabama from the federal 26 U.S.C. § 951A (Global Intangible Low-Taxed Income).
• Allows certain contributions by the State or its political subdivisions under 26 U.S.C. § 118(b)(2) to be deducted from federal taxable income when computing Alabama taxable income, with related adjustments mandated by the bill.
• Provides that if a corporate taxpayer’s business interest expense deduction is not limited by § 163(j) on the federal return, it will not be limited at the state level; otherwise, limits are calculated on a separate-entity basis or for Alabama consolidated groups.
• Allows Electing Pass-Through Entities to be taxed at the entity level, with specific election procedures and requirements.
• Adopts the Multistate Tax Compact provisions for uniformity in tax apportionment and administration, including creation of a Multistate Tax Commission and related governance and procedures.
• Adds sections that implement 40-18-35.2, 40-18-35.3, and 40-18-39.1 to codify these tax changes, including treatment of GILTI-related deductions, contributions under §118(b)(2), and business interest limitations.
• Sets phased effective dates: some provisions apply for tax years after enactment or after federal enactments, with retroactive or earlier applicability for certain sections.

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