HB117 Alabama 2023 Session

Summary

Primary Sponsor

Danny GarrettRepresentative

Republican

Session

Regular Session 2023

Title

Relating to income taxes; to amend Section 40-18-19, Code of Alabama 1975, as last amended by Act 2022-292, Act 2022-294, and Act 2022-297 of the 2022 Regular Session of the Legislature; to increase the exemption for taxable retirement income for individuals who are 65 years of age or older.

Summary

HB117 would raise the state income tax exemption for retirement income for Alabama residents 65 or older from $6,000 to $10,000, with $6,000 in 2023 and $10,000 starting in 2024, and it becomes law after the governor signs it.

What This Bill Does

The bill changes the amount of taxable retirement income that is exempt from Alabama income tax for seniors 65+. It sets the exempt amount at $6,000 for tax year 2023 and increases it to $10,000 for tax year 2024 and thereafter. It preserves the existing list of retirement income sources that qualify for the exemption and authorizes the Department of Revenue to implement the changes through rules; the act overall takes effect when it becomes law (third month after the governor approves).

Who It Affects

• Resident Alabama taxpayers aged 65 or older who have taxable retirement income; they would be able to exempt up to $6,000 in 2023 and up to $10,000 in 2024 and beyond from state income tax.
• Retirees receiving pensions, annuities, or retirement allowances from sources such as the Teachers' Retirement System, Employees' Retirement System, firefighter and police retirement systems, U.S. government retirement programs, and other qualifying sources listed in the bill.

Key Provisions

• Section 40-18-19(a)(7) amended to increase the first $6,000 of taxable retirement income exempt from state income tax for individuals 65+ in 2023, with the exemption increasing to $10,000 starting January 1, 2024.
• The exemption applies only to resident taxpayers age 65 or older and to the specified sources of retirement income listed in the statute (e.g., state and federal retirement systems, police/firefighter retirement, and other qualifying programs).
• The Department of Revenue may enact rules to implement and administer the new exemption changes.
• The act becomes effective on the first day of the third month after the governor's 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, income tax exemption for retirement income increased