HB163 Alabama 2025 Session

Summary

Primary Sponsor

David FaulknerRepresentative

Republican

Session

2025 Regular Session

Title

Decoupling the Tax Cuts and Jobs Act (TJCA) Amendment to Section 174 of the Internal Revenue Code

Summary

HB163 would decouple Alabama from the federal changes to amortizing research and experimental expenditures and restore pre-2022 treatment for Alabama corporate income tax purposes.

What This Bill Does

It stops Alabama from following the federal TCJA change that requires amortizing R&E expenditures over five years domestically and fifteen years abroad. It allows Alabama tax filers to either deduct R&E expenditures up front or treat them as deferred expenses using the pre-2022 rules, for Alabama tax purposes. This change applies to R&E expenditures under Title 40 Chapters 16 and 18 and includes retroactive effect, with the act becoming effective for tax years beginning on or after January 1, 2024; the Department of Revenue may adopt rules to implement it.

Who It Affects

• Alabama-based corporations and other taxpayers subject to Alabama's corporate income tax who incur research and development expenditures, who can choose between an immediate deduction or deferral under pre-2022 rules.
• The Alabama Department of Revenue, which would implement the new R&E expenditure treatment through administrative rules.

Key Provisions

• Decouples Alabama from the TCJA amendment to 26 U.S.C. §174 and rejects the federal amortization changes for R&E expenditures.
• Allows taxpayers to currently deduct R&E expenditures or treat them as deferred expenses according to pre-2022 rules (as if §174 existed before 2022).
• Applies to R&E expenditures for Alabama tax purposes under Title 40 Chapters 16 and 18 and includes retroactive effect.
• Authorizes the Department of Revenue to adopt rules to implement and administer the new treatment.

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