House Bill 657 Alabama 2026 Session

Summary

Primary Sponsor

Kelvin DatcherRepresentative

Democrat

Session

2026 Regular Session

Title

Income Taxes; to provide a one-time refundable income tax credit to qualified taxpayers

Summary

HB657 would create a one-time refundable income tax credit for certain Alabama individual taxpayers for the 2025 tax year.

What This Bill Does

The bill defines 'qualified taxpayer' as an individual who filed Alabama income tax returns for both 2024 and 2025 and excludes nonresidents, estates/trusts, and those claimed as a dependent in 2024 (with an exception for dependents who earned income in 2024). For eligible taxpayers, the credit is automatic and equals the lesser of their 2024 tax liability or a fixed amount based on filing status ($250 for single or separate, $375 for head of household, $500 for joint). Nonresident or part-year residents have prorated credits based on Alabama income, and the credit cannot exceed the 2025 tax liability.

Who It Affects

• Qualified individual taxpayers who filed 2024 and 2025 Alabama returns (excluding nonresidents, estates/trusts, and those claimed as dependents in 2024) will receive a one-time credit for 2025.
• Nonresident or part-year residents whose credit is prorated and who earned income in 2024 may be eligible only to the extent of the prorated credit, and the credit cannot exceed their 2025 tax liability.

Key Provisions

• Adds Section 40-18-513 to authorize a one-time refundable income tax credit for the 2025 tax year.
• Defines 'qualified taxpayer' as an individual who filed 2024 and 2025 Alabama returns, excluding nonresidents, estates/trusts, and dependents (with an exception for dependents who earned income in 2024).
• Credit amount is the lesser of 2024 tax liability or a fixed amount by 2025 filing status: $250 (single or married filing separately), $375 (head of household), $500 (married filing jointly).
• Nonresidents/part-year residents receive a prorated credit based on Alabama income proportion.
• Credit cannot exceed 2025 tax liability; refunds are not taxable income; refunds are issued electronically or by check and may be offset to outstanding liabilities.
• The Department may adopt rules to implement and administer the section.
• Effective immediately.

AI-generated summary using openai/gpt-5-nano-2025-08-07 on Mar 31, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue