SB277 Alabama 2023 Session

Summary

Primary Sponsor

Robert L. StewartSenator

Democrat

Session

Regular Session 2023

Title

Relating to state income tax credits for rural physicians; to designate Sections 40-18-130, 40-18-131, and 40-18-132, Code of Alabama 1975, as Division 1 of Article 4A of Chapter 18 of Title 40, Code of Alabama 1975; to terminate the income tax credit authorized for a rural physician under the existing Article 4A of Chapter 18, Title 40, Code of Alabama 1975, effective December 31, 2023; to provide that any physician who claimed the credit or claims the credit under the existing Article 4A for the tax year ending on December 31, 2023, would be authorized to continue to claim the credit under the prior law until the credit period authorized under the prior law for that physician expires; to add Division 2 to Article 4A of Chapter 18, Title 40, Code of Alabama 1975, to further provide for a rural physician income tax credit; to provide definitions; to modify the requirement for residence and practice in a rural community; to remove the requirement for hospital privileges in a rural community; and to require the State Board of Medical Examiners to certify physicians who qualify for the income tax credit.

Summary

SB277 ends the current rural physician tax credit after 2023 and creates a new, separate credit program starting in 2024 with updated definitions, certification, and eligibility rules.

What This Bill Does

The bill terminates the existing rural physician income tax credit after December 31, 2023, but allows those who claimed the credit for the tax year ending December 31, 2023 to continue their use under the old law for the remainder of their five-year period. It creates a new Division 2 credit starting with tax year 2024 for newly qualifying rural physicians, worth $5,000 per tax year for up to five years (through 2028). It defines what counts as a rural community and a rural physician, and it removes the hospital privileges requirement. It requires the State Board of Medical Examiners to certify qualifying physicians, issue certificates, and have those certificates submitted with tax returns; the Department of Revenue and the Board will report annually and the Department will adopt necessary rules.

Who It Affects

• New rural physicians who qualify under the Division 2 program: they could receive a $5,000 tax credit per year for up to five years (2024–2028) if they live and practice in a defined rural community and meet certification and absence rules.
• Physicians who previously claimed the Division 1 rural physician credit before its termination: their Division 1 credits are terminated after 2023, but they may continue to claim under the prior law only for the five-year period already available to them; they are not eligible for the new Division 2 credit.

Key Provisions

• Section 1 designates Sections 40-18-130, 40-18-131, and 40-18-132 as Division 1 of Article 4A and terminates the existing rural physician credit for tax years after 12/31/2023, with grandfathering for 2023 claims.
• Section 2 allows a 2023 claimant to continue claiming the Division 1 credit for the remainder of the five-year period under prior law, and clarifies the five-year limit applies to those 2023 claims.
• Section 3 adds Division 2 to Article 4A, creating a new rural physician credit effective for tax years beginning 1/1/2024 and ending 12/31/2028, with a $5,000 annual credit for newly qualifying rural physicians for up to five years.
• Division 2 defines 'rural community' and 'rural physician' and sets eligibility rules, including prohibition on those who previously claimed Division 1 and a three-year return-to-rural requirement after urban practice for those who left rural practice before 2024.
• Division 2 removes the hospital privileges requirement for qualification.
• Division 2 requires certification by the State Board of Medical Examiners, with certificates submitted to the Department of Revenue and automatic denial if missing.
• The Board and Department of Revenue must operate reporting and rulemaking, including annual informational reports on issued certificates and credits.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.