HB116 Alabama 2023 Session

Summary

Primary Sponsor

Danny GarrettRepresentative

Republican

Session

Regular Session 2023

Title

Relating to individual income taxes; to amend Section 40-18-5, Code of Alabama 1975, to eliminate the two percent tax rate on the first five hundred dollars ($500) of taxable income for single persons, heads of families, and married persons filing separate returns and would also eliminate the two percent tax rate on the first one thousand dollars ($1,000) of taxable income for married persons filing a joint return.

Summary

HB116 would eliminate Alabama's lowest tax bracket and make more income tax-free for most filers by changing how the first dollars of income are taxed.

What This Bill Does

It eliminates the 2% tax rate on the first $500 of taxable income for single, head of family, and married filing separately filers, and on the first $1,000 for married filing jointly. Beginning with tax year 2023-2024, those amounts become exempt from tax. Then 4% would apply to taxable income above the exempt amount up to $3,000 for singles/HOH/separate or $6,000 for joint filers, and 5% would apply to income above those levels. In short, the bill shifts the lowest tax bracket to 0% for the initial income, with a 4% bracket following and a 5% bracket for higher income.

Who It Affects

• Single persons, heads of families, and married persons filing separate returns — the first $500 of taxable income would be exempt starting in 2023-2024, with a 4% tax on income above that up to $3,000 and a 5% tax on income above $3,000.
• Married persons filing a joint return — the first $1,000 of taxable income would be exempt starting in 2023-2024, with a 4% tax on income above that up to $6,000 and a 5% tax on income above $6,000.

Key Provisions

• Eliminate the 2% tax rate on the first $500 of taxable income for single, head of family, and married filing separately filers.
• Eliminate the 2% tax rate on the first $1,000 of taxable income for married filing jointly filers.
• From tax year 2023-2024, the first $500 (or $1,000 for joint filers) is exempt from tax.
• 4% tax rate applies to taxable income above the exempt amount up to $3,000 (single/HOH/separate) or $6,000 (joint).
• 5% tax rate applies to taxable income above $3,000 (single/HOH/separate) or above $6,000 (joint).
• Section 2 states the act becomes effective on the first day of the third month after passage and governor 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 and revenue, individual income tax lowest bracket eliminated