SB47 Alabama 2023 Session

Summary

Primary Sponsor

Arthur OrrSenator

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

SB47 would eliminate the 2% tax rate on the lowest income levels and make the first $500 (or $1,000 for joint filers) tax-free, with 4% and 5% brackets replacing it.

What This Bill Does

It changes how Alabama taxes personal income by removing the 2% rate for the lowest earnings. Starting in 2023, the first $500 of taxable income for single filers, heads of households, and those filing separately would be tax-free; the first $1,000 for married couples filing jointly would also be tax-free. For these groups, income above the exempt amount would be taxed at 4% up to $3,000 (or $6,000 for joint filers) and 5% on income above those thresholds. The top tax rate remains 5%.

Who It Affects

• Single filers, heads of household, and married filing separately: the first $500 of taxable income becomes tax-free starting in 2023; income above that is taxed at 4% up to $3,000 and 5% above $3,000.
• Married couples filing jointly: the first $1,000 of taxable income becomes tax-free starting in 2023; income above that is taxed at 4% up to $6,000 and 5% 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; starting with tax year 2023, this amount becomes exempt.
• Introduce 4% tax on taxable income in excess of the exempt amount up to $3,000 for singles/heads of household/separate filers.
• Introduce 5% tax on taxable income above $3,000 for singles/heads of household/separate filers.
• Eliminate the 2% tax rate on the first $1,000 of taxable income for married filing jointly filers; starting with tax year 2023, this amount becomes exempt.
• Introduce 4% tax on taxable income in excess of $1,000 up to $6,000 for joint filers.
• Introduce 5% tax on taxable income above $6,000 for joint filers.
• Effective date: the act takes effect on the first day of the third month after passage and governor approval.
• Amends Section 40-18-5, Code of Alabama 1975, to implement these changes.

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