SB65 Alabama 2023 Session

Summary

Primary Sponsor

Andrew JonesSenator

Republican

Session

Regular Session 2023

Title

Relating to municipal occupational license taxes; to add Section 11-51-91.1 to the Code of Alabama 1975, to reduce any municipal occupational license tax greater than one percent based on an annual reduction in the tax until the tax would be one percent; to provide that any occupational license tax levied by any municipality would not apply to any person performing an occupation in the police jurisdiction of the municipality or on any property annexed into the municipality after January 1, 2023; to provide for a referendum under certain conditions in certain counties in which two or more municipalities levied an occupational tax greater than one percent on January 1, 2023; to prohibit a municipality from levying a new occupational license tax or increasing the rate of any existing municipal occupational license tax; to provide for certain exceptions from any occupational taxes for certain temporary workers and for severance pay; to specify the power of a municipality pursuant to Section 11-51-90 of the Code of Alabama 1975, to license an exhibition, trade, business, vocation, occupation, or profession only within the corporate limits and jurisdiction of the municipality, to further provide for refunds and collections of the license fees and taxes, and to provide that these provisions are retroactive and declaratory of existing law.

Summary

SB65 would cap and gradually reduce municipal occupational license taxes above 1% to 1%, restrict where they apply, require a county referendum in certain cases, and create refund/remittance rules.

What This Bill Does

The bill starts a process to slowly reduce any municipal occupational license tax above 1% to 1% over time, with annual reductions. It prohibits new taxes or increases, and excludes occupations in the police jurisdiction or on property annexed after Jan 1, 2023 from the tax. It requires a county-wide referendum in counties with two or more municipalities above 1% in 2023 to decide whether to continue the tax, and sets outcomes based on the vote. It also includes exemptions for temporary workers and severance pay, and sets rules for refunds and employer remittance for activity within or outside municipal boundaries, with licensing authority limited to activity inside the municipality and retroactive language clarifying existing law.

Who It Affects

• Municipalities that currently levy occupational license taxes would have to gradually reduce rates above 1% toward 1%, and would be barred from creating new taxes or increasing rates; they would also face refund/remittance procedures related to activities outside their jurisdiction and potential county referendums in applicable counties.
• Individual workers and employers subject to municipal occupational license taxes would see exemptions and changes in how the tax applies, including non-application for work in police jurisdictions or annexed property after 2023, exemptions for certain temporary workers and severance pay, and refund/remittance procedures for activity outside the municipality.

Key Provisions

• Adds the Family Income Protection Act (Code 11-51-91.1).
• Starting October 1 after enactment, municipalities must progressively reduce the maximum occupational license tax rate above 1% by at least 0.2 percentage points each year until it reaches 1%.
• No municipality may levy a new occupational license tax or increase an existing rate once the Act takes effect.
• Taxes would not apply to a person performing an occupation in the municipality's police jurisdiction or on property annexed into the municipality after January 1, 2023.
• In counties with two or more municipalities above 1% on January 1, 2023, a county-wide referendum would be held in 2028 to decide whether municipalities may continue to levy the tax up to 1%; a Yes vote allows continuation, a No vote phases out the tax by October each year until eliminated.
• Temporary workers and severance pay are exempt from occupational license taxes, and the Act restricts licensing to activities conducted within the municipality.
• Refund procedures are created for licensees with activity outside the municipality and for remittances by employers; municipalities may only collect license fees based on activity within the municipality.
• The Act is retroactive and declaratory of existing law, and includes immediate effective date language and related provisions for refunds and collections.

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