Alabama 2022 Regular Session

Alabama House Bill HB147

Introduced
1/13/22  

Caption

Taxation, income tax, exclusion of enhanced federal child tax credits from American Rescue Plan Act from calculation of federal income tax deduction for tax year 2021, to provide an extension of the due date for certain taxpayers, Secs. 40-16-3.1, 40-18-39.1 added.

Impact

The bill modifies existing provisions in the Alabama tax code to provide a clearer path for taxpayers benefitting from these credits. By calculating the federal income tax deduction as if the taxpayers paid their federal income tax under the rules in effect before the American Rescue Plan, residents will avoid being penalized at the state level for taking advantage of federal relief measures. This legislative change could potentially maintain more disposable income for families who depend on these credits, thus supporting local economies.

Summary

House Bill 147 addresses the taxation law regarding the federal child tax credit, earned income tax credit, and child and dependent care tax credit that were expanded under the American Rescue Plan Act of 2021. This bill aims to ensure that the deductions allowed for federal income tax paid by Alabama taxpayers for the tax year ending on December 31, 2021, do not account for the reductions in federal tax attributable to these additional credits. The goal is to allow individuals to fully benefit from the enhanced federal credits without incurring additional state tax liabilities.

Contention

There may be points of contention surrounding HB147, as the impact of changes in state tax laws can be debated. Proponents of the bill argue that it aligns Alabama's tax policies with federal changes aimed at reducing financial strain on families, particularly amidst ongoing economic challenges. However, opponents could raise concerns about the long-term implications of conforming state tax laws closely to federal policies, questioning whether such alignment might constrain the state's fiscal flexibility or complicate future tax reforms.

Companion Bills

No companion bills found.

Previously Filed As

AL SB52

Taxation, tax credits, Alabama employers provided a tax credit for employees targeted under the federal Work Opportunity Tax Credit program

AL SB333

Taxation, tax credits, Alabama employers provided a tax credit for employees eligible under the federal Work Opportunity Tax Credit program.

AL HB52

Income Taxes; to make technical changes to the funding provisions of the CHOOSE Act credits and increase funding, and to extend the sunset date for deductions for ABLE contributions.

AL HB388

Income tax, exemption for taxable retirement income increased

AL HB389

Income tax, optional standard deduction increased, adjusted gross income range allowed for maximum dependent exemption increased

AL HB529

Taxation, taxation of vapor products provided for

AL HB380

Taxation and revenue; income tax credit for storm shelter construction, extended

AL HB249

Income taxes, tax deduction for contributions to an ABLE savings account extended

AL HB396

Taxation and Revenue; Homestead ad valorum taxes of certain veterans prohibited from inclusion in debt-to-income ratio

AL HB381

Taxation, tax credit for childcare costs incurred by employers and for childcare facilities created

Similar Bills

No similar bills found.