HB217 Alabama 2025 Session

Summary

Primary Sponsor

Mike ShawRepresentative

Republican

Session

2025 Regular Session

Title

Relating to gross income; to amend Section 40-18-14, Code of Alabama 1975; to exclude difficulty of care payments from gross income.

Summary

HB217 would exclude certain Medicaid HCBS waiver payments to individual care providers from Alabama gross income for state income tax.

What This Bill Does

The bill would amend Section 40-18-14 to add an exemption so that payments under certain Medicaid Home and Community-Based Services Waiver programs to individual care providers are not counted as gross income. It specifies that this exemption would apply to tax years beginning in 2026 (with the act taking effect October 1, 2025). The measure also authorizes the Department of Revenue to adopt rules to administer the new exemption and imposes employer reporting requirements related to overtime pay as part of the act’s administration.

Who It Affects

• Individual care providers who receive HCBS waiver payments, who would have those payments excluded from their gross income for Alabama state tax purposes.
• Employers that pay overtime to full‑time hourly employees, who would face new reporting requirements to the Department of Revenue (totals paid for overtime and number of employees, with specified deadlines).
• Alabama resident and nonresident taxpayers, who may see changes to how HCBS waiver payments are treated in their gross income calculations starting in 2026.
• State agencies (Department of Revenue, Legislative Services Agency, and Department of Finance) responsible for implementing, collecting, and reporting data under the new requirements.

Key Provisions

• Excludes payments to individual care providers under certain Medicaid HCBS Waiver programs from gross income.
• Amends Section 40-18-14 to add the new exemption to the list of items not counted as gross income for state tax purposes.
• Applies to tax years beginning on or after January 1, 2026; the act becomes effective October 1, 2025.
• Department of Revenue may adopt rules to administer the new exemption.
• Imposes employer reporting requirements for overtime compensation (total overtime pay and number of employees) with specified reporting deadlines and data sharing with the Legislative Services Agency and the Department of Finance.

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