SB71 Alabama 2025 Session

Summary

Primary Sponsor

Andrew JonesSenator

Republican

Session

2025 Regular Session

Title

Income tax; certain compensation of civilian employees of Armed Forces, exempt

Summary

Alabama would extend its state income tax exemption to include certain civilian DoD/Armed Forces compensation and active-duty military pay in specific deployment or combat situations.

What This Bill Does

The bill expands the current exemption to cover civilian employees of the U.S. Department of Defense and Armed Forces. It states that compensation earned while the individual is in a combat zone, deployed outside the United States, or activated to support emergencies is not subject to Alabama income tax. The change applies to tax years beginning on or after January 1, 2026.

Who It Affects

• Civilian employees of the U.S. Department of Defense or U.S. Armed Forces who receive compensation from the federal government; their pay is exempt in the specified deployment/combat scenarios.
• Active-duty members of the U.S. Armed Forces (including National Guard and Reserve) whose compensation is earned while in combat zones, deployed outside the United States, or activated to help with emergencies; their pay is exempt in those scenarios.

Key Provisions

• The bill amends Section 40-18-3 to expand the Alabama income tax exemption to include civilian employees of the U.S. Department of Defense and Armed Forces.
• Compensation earned while the recipient is in a combat zone, deployed outside the United States, or activated to support state or federal emergencies is exempt from Alabama state income tax.
• The exemption applies to tax years beginning on or after January 1, 2026.
• The bill specifies that the exemption applies to compensation paid by the United States or its agencies and instrumentalities.

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