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, extension of the due date for certain taxpayers, Secs. 40-16-3.1, 40-18-39.2 added.
Impact
Incorporating Sections 40-16-3.1 and 40-18-39.2 into the Code of Alabama, the bill also provides a deadline extension for financial institution excise taxpayers and corporate income taxpayers to file their state returns, adding financial relief for those impacted by the pandemic. The monthly extension applies to those who adequately request it before the predetermined deadlines, thus promoting compliance and reducing the risk of penalties during the tax filing process.
Summary
House Bill 231 aims to adjust the calculation for the state income tax deductions for individual taxpayers related to the federal income tax paid for the tax year ending December 31, 2021. The bill stipulates that deductions will be determined without factoring in the reductions attributable to the enhanced federal child tax credit, earned income tax credit, and child and dependent care tax credit as provided by the American Rescue Plan Act of 2021. This approach allows individuals eligible for these federal credits to receive their full amount without the state's tax reduction impacting their benefits.
Sentiment
The sentiment surrounding HB 231 appears overwhelmingly positive, with bipartisan support evident during discussions and the voting process. Advocacy for the bill highlights its focus on providing immediate tax relief to lower-income families and individuals who may struggle with tax burdens amidst ongoing economic challenges related to the aftermath of the pandemic. The public and legislative responses have been largely favorable, recognizing the temporary assistance it affords to constituents.
Contention
Debate around the bill indicated a general consensus on the need for tax relief to mitigate the financial impacts of COVID-19, yet concerns lingered regarding potential long-term implications for state revenue and budgeting. Critics expressed caution over continued extensions and tax exemptions, fearing that they may lead to future budget deficits if not addressed adequately in forthcoming legislative sessions. Discussion points included the need for balance between providing necessary support while ensuring state financial stability.
Same As
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, extension of the due date for certain taxpayers, Secs. 40-16-3.1, 40-18-39.2 added.
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.