SB155 Alabama 2022 Session

Summary

Primary Sponsor

Larry StuttsSenator

Republican

Session

Regular Session 2022

Title

Deferred compensation plans, portion of income exempt from income tax, Sec. 40-18-19 am'd.

Summary

The bill would make 80% of distributions from defined contribution deferred compensation plans tax-exempt for Alabama residents aged 65 or older.

What This Bill Does

It amends Alabama's income tax exemptions to allow 80% of distributions from defined contribution deferred compensation plans to be exempt from state income tax for residents age 65 or older, beginning January 1, 2023. The exemption is limited to 80% of the distributions and applies only to eligible senior residents. The Department of Revenue would implement and administer this exemption, and the act becomes effective the first day of the third month after the Governor signs it.

Who It Affects

• Resident Alabama taxpayers who are 65 years of age or older and receive distributions from a defined contribution deferred compensation plan, who would have up to 80% of those distributions exempt from Alabama income tax.

Key Provisions

• Beginning January 1, 2023, 80 percent of the distributions from a defined contribution deferred compensation plan are exempt from Alabama state income tax.
• The exemption may be claimed only by individual residents who are 65 years of age or older, and no more than 80 percent of the distributions may be exempt.
• Nonresident taxpayers would receive exemptions proportional to Alabama-source income under existing rules in subsection (b).
• The Department of Revenue may enact rules to implement and administer the exemption.
• The act becomes effective on the first day of the third month following its passage and approval by the Governor.

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