SB107 Alabama 2024 Session

Summary

Primary Sponsor

Jay HoveySenator

Republican

Session

Regular Session 2024

Title

Income tax, due date for electing pass-through to make election extended

Summary

SB107 extends the election deadline for Alabama electing pass-through entities to 2024, aligning it with the return due date (including extensions).

What This Bill Does

It changes the timing for when an electing pass-through entity must file its election to be taxed as such for tax years beginning January 1, 2024, to the due date of the Alabama income tax return (including extensions). For 2021-2023, the current rule remains that the election can be made anytime during the year or by the 15th day of the third month after year-end. Beginning in 2025, the election or revocation must be made on the timely filed return (including extensions). The election remains binding for that year and future years unless revoked under specified procedures, and the entity’s tax situation is defined as paid by the entity at the highest rate with owners not personally liable.

Who It Affects

• Electing pass-through entities (Alabama S-corporations and Subchapter K entities) — the deadline to elect tax treatment is extended for 2024 to match the return due date.
• Owners, members, partners, or shareholders of those electing pass-through entities — their personal liability for the entity's tax remains limited per the bill, while the entity itself handles the tax under the electing regime.

Key Provisions

• Defines 'electing pass-through entity' as Alabama S-corporations and Subchapter K entities that elect to be taxed as electing pass-through entities under the specified section.
• For tax years beginning in 2024, requires the election to be filed with the Department of Revenue by the due date of the applicable income tax return, including extensions.
• Election, once made, is binding for that year and subsequent years and can be revoked only under the prescribed procedure and time.
• From tax years beginning in 2025 and later, the election or revocation must be made on the timely filed return (including extensions).
• The entity pays the tax at the highest marginal rate and owners are not personally liable for this tax; the election does not trigger liquidation or a taxable event.

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 & Revenue