HB268 Alabama 2025 Session

Summary

Primary Sponsor

Parker MooreRepresentative

Republican

Session

2025 Regular Session

Title

Lottery proceeds; state income tax exemption

Summary

HB268 would exempt lottery prize winnings from Alabama state income tax, with the exemption taking effect for tax year 2026 and subject to a possible future constitutional amendment.

What This Bill Does

The bill amends Section 40-18-19 to remove lottery prize proceeds from state income taxation. The lottery prize exemption becomes effective for tax year beginning January 1, 2026, and would be void if a statewide constitutional amendment authorizing games of chance is ratified. The overall act itself becomes effective October 1, 2025.

Who It Affects

• Alabama resident individuals who win prizes from state lotteries, whose prize winnings would be exempt from Alabama state income tax starting in 2026.
• Nonresident individuals who win prizes from state lotteries and would otherwise be subject to Alabama income tax on those winnings, whose winnings would also be exempt starting in 2026 (subject to any governing rules).

Key Provisions

• Exempts all proceeds from a prize won in any state lottery from Alabama state income taxation (as added by the bill).
• Effective date for the lottery prize exemption: tax year beginning January 1, 2026.
• The exemption would be void if a statewide constitutional amendment authorizing games of chance is ratified.
• The act becomes effective October 1, 2025.

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