HB231 Alabama 2022 Session

Summary

Primary Sponsor

Jim CarnsRepresentative

Republican

Session

Regular Session 2022

Title

Taxation, income tax, exclusion of enhanced federal child tax credits from American Rescue Plan Act from calculation of federal income tax deduction for tax year 2021, extension of the due date for certain taxpayers, Secs. 40-16-3.1, 40-18-39.2 added.

Summary

HB231 changes how the 2021 federal tax deduction is calculated for Alabama taxes to ignore ARPA credits and adds filing extensions for certain business taxes.

What This Bill Does

For the tax year ending December 31, 2021, the federal income tax deduction on Alabama returns will be calculated as if ARPA credits (the enhanced child tax credit, earned income tax credit, and child/dependent care credit) did not reduce federal tax, using the pre-ARPA 2020 federal tax rules to determine the deduction. This may increase the deduction and reduce Alabama tax for some taxpayers receiving ARPA credits. The act also creates filing extensions: financial institutions subject to the Alabama financial institution excise tax and corporate income taxpayers may have one extra month after the federal due date to file their Alabama returns, with potential an additional month in 2020-2021 if approved, and the extensions do not postpone any tax payments beyond the original due dates. The Department of Revenue may adopt rules to implement these changes, and the law becomes effective immediately.

Who It Affects

• Individual Alabama taxpayers who claim the federal income tax deduction on their Alabama returns for 2021; the deduction will be calculated as if ARPA-related reductions did not apply, potentially lowering their Alabama tax liability.
• Businesses subject to Alabama taxes: financial institutions excise tax filers and corporate income tax filers; these groups receive a one-month extension after the federal due date to file their Alabama returns (with possible extra extension in 2020-2021 upon approval), without deferring payment beyond the original due date.

Key Provisions

• Section 1: For the 2021 tax year, the federal income tax deduction on Alabama returns is determined without considering ARPA reductions for the additional federal credits (CTC, EITC, and CCDC); the deduction is calculated as if the federal tax paid matched what would have been owed under the pre-ARPA 2020 Internal Revenue Code.
• Section 2: Adds Section 40-16-3.1 allowing financial institutions excise taxpayers to file their Alabama returns one month after the due date of the corresponding federal return (with potential one additional month for 2020-2021 upon request and approval). Adds Section 40-18-39.2 allowing corporate income taxpayers the same one-month extension after the federal due date.
• Section 2(b): Extensions do not allow deferral of the tax payment beyond the original due date.
• Section 3: The Department of Revenue may adopt rules to implement the act.
• Section 4: The act becomes effective immediately after passage and approval.

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