HB77 Alabama 2026 Session

Summary

Primary Sponsor

Kenneth PaschalRepresentative

Republican

Session

2026 Regular Session

Title

Taxation and Revenue; disabled veterans' homestead taxes inclusion in debt-to-income ratio under certain circumstances prohibited

Summary

HB77 would allow a 100% disabled veteran to obtain a tentative disability certificate before purchasing a home and prevent ad valorem taxes on that home from being counted in debt-to-income calculations.

What This Bill Does

The bill would require a tax official to issue a tentative certificate of permanent and total disability to a veteran with a 100% rating after they submit specified information. The tentative certificate would be issued within 20 days of receiving all required items and would be considered valid for exemption when the veteran purchases a homestead. It would prohibit settlement agents and loan closing officers from counting ad valorem taxes for the homestead when calculating the borrower's debt-to-income ratio if the veteran has provided the tentative certificate. The Department of Revenue would create the form for the tentative certificate, which would include a note about eligibility for exemption from ad valorem taxes, and the act would take effect on October 1, 2026.

Who It Affects

• Disabled veterans with a 100% disability rating who plan to buy a homestead and may use a tentative certificate to support their loan application.
• Settlement agents, loan closing officers, and mortgage lenders who would need to exclude homestead ad valorem taxes from debt-to-income calculations when a veteran provides a tentative certificate.

Key Provisions

• Authorizes issuance of a tentative certificate of permanent and total disability to 100% disabled veterans before purchasing a homestead upon submission of required information (affidavit, purchase agreement, and VA documentation).
• Requires the Department of Revenue to establish the form of the tentative certificate and to include a section confirming eligibility for ad valorem tax exemption under existing statutes.
• Requires the tentative certificate to be issued within 20 days after all information is received and to be considered a valid certificate upon purchase of the homestead.
• Prohibits settlement agents and loan closing officers from considering ad valorem taxes in the debt-to-income ratio of a borrower who has provided the tentative certificate.
• Sets the effective date of October 1, 2026.

AI-generated summary using openai/gpt-5-nano on Feb 12, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue