Alabama 2022 Regular Session

Alabama Senate Bill SB155 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1 SB155
2	2	2 216616-1
3	3	3 By Senator Stutts
4	4	4 RFD: Finance and Taxation Education
5	5	5 First Read: 01-FEB-22
6	6
7	7	Page 0 1 216616-1:n:01/20/2022:LSA-DJ/cmg
8	8	2
9	9	3
10	10	4
11	11	5
12	12	6
13	13	7
14	14	8 SYNOPSIS: Currently, distributions from defined
15	15	9 contribution deferred compensation plans are
16	16	10 taxable as income.
17	17	11 This bill would provide that 80 percent of
18	18	12 those distributions is exempt from income tax for
19	19	13 individuals who are 65 years of age or older.
20	20	14
21	21	15 A BILL
22	22	16 TO BE ENTITLED
23	23	17 AN ACT
24	24	18
25	25	19 To amend Section 40-18-19, Code of Alabama 1975,
26	26	20 relating to exemptions from state income taxation; to provide
27	27	21 that 80 percent of the distribution from a defined
28	28	22 contribution deferred compensation plan is exempt from state
29	29	23 income tax for individuals who are 65 years of age or older.
30	30	24 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
31	31	25 Section 1. Section 40-18-19, Code of Alabama 1975,
32	32	26 is amended to read as follows:
33	33	27 "§40-18-19.
34	34	Page 1 1 "(a) The following exemptions from income taxation
35	35	2 shall be allowed to every individual resident taxpayer:
36	36	3 "(1) Retirement allowances, pensions and annuities,
37	37	4 or optional allowances, approved by the Board of Control of
38	38	5 the Teachers' Retirement System of Alabama, which exempt
39	39	6 status is set out in Section 16-25-23.
40	40	7 "(2) Retirement allowances, pensions and annuities,
41	41	8 or optional allowances, approved by the Board of Control of
42	42	9 the Employees' Retirement System of Alabama, which exempt
43	43	10 status is set out in Section 36-27-28.
44	44	11 "(3) The first eight thousand dollars ($8,000) of
45	45	12 any retirement compensation, retirement allowances, pensions
46	46	13 and annuities, or optional allowances, received by any
47	47	14 eligible firefighter, as defined in Sections 36-32-1 and
48	48	15 36-32-2, or his or her designated beneficiary, from any
49	49	16 firefighting agency established in the State of Alabama, but
50	50	17 only if such retirement compensation, retirement allowances,
51	51	18 pensions and annuities, or optional allowances as are awarded
52	52	19 as a result of fire protection services rendered. This
53	53	20 subdivision shall become effective for the taxable years
54	54	21 beginning January 1, 1987, and thereafter following its
55	55	22 passage and approval by the Governor, or upon its otherwise
56	56	23 becoming a law; provided, that for the taxable years beginning
57	57	24 on or after January 1, 1991, all of the pension and retirement
58	58	25 payments shall be exempt from taxation.
59	59	26 "(4) The first eight thousand dollars ($8,000) of
60	60	27 any retirement compensation, retirement allowances, pensions
61	61	Page 2 1 and annuities, or optional allowances received by any eligible
62	62	2 peace officer, as defined in subdivision (11) of Section
63	63	3 36-21-60, or his or her designated beneficiary, from any
64	64	4 police retirement system established in the State of Alabama,
65	65	5 but only if the retirement compensation, retirement
66	66	6 allowances, pensions and annuities, or optional allowances are
67	67	7 awarded as a result of police services rendered. This
68	68	8 subdivision shall become effective for taxable years beginning
69	69	9 January 1, 1984, and thereafter; provided, that for the
70	70	10 taxable years beginning on or after January 1, 1991, all of
71	71	11 the pension and retirement payments shall be exempt from
72	72	12 taxation.
73	73	13 "(5) Income received as annuities under the United
74	74	14 States Retirement System from the United States Government
75	75	15 Civil Service Retirement and Disability Fund, including income
76	76	16 received from the Tennessee Valley Authority's pension system,
77	77	17 income received as annuities under the United States Foreign
78	78	18 Service Retirement and Disability Fund, or income received
79	79	19 from any other United States government retirement and
80	80	20 disability fund.
81	81	21 "(6) Beginning January 1, 1991, all payments made on
82	82	22 or after such date to a retiree or his designated beneficiary
83	83	23 under a "defined benefit plan," as defined under Section
84	84	24 414(j) of the Internal Revenue Code of 1986, as amended from
85	85	25 time to time, to the extent such payment would be taxable for
86	86	26 federal income tax purposes.
87	87	Page 3 1 "(7) Net income realized by individuals and
88	88	2 partnerships from time to time in the business of conducting a
89	89	3 financial business employing moneyed monied capital coming
90	90	4 into competition with the business of national banks, but only
91	91	5 if such individuals and partnerships are subject to an excise
92	92	6 tax imposed by this state on or with respect to such income.
93	93	7 "(8) In the case of a single person or a married
94	94	8 person not living with husband or wife, a personal exemption
95	95	9 of one thousand five hundred dollars ($1,500) or, in the case
96	96	10 of a head of a family or a married person living with husband
97	97	11 or wife, a personal exemption of three thousand dollars
98	98	12 ($3,000), but a husband and wife living together shall receive
99	99	13 only one personal exemption of three thousand dollars ($3,000)
100	100	14 against their aggregate income, and in case they make separate
101	101	15 returns each must claim a personal exemption of one thousand
102	102	16 five hundred dollars ($1,500).
103	103	17 "(9) a. Three hundred dollars ($300) for each
104	104	18 person, other than husband or wife, dependent upon the
105	105	19 taxpayer, and over half of whose support, for the calendar
106	106	20 year in which the taxable year for the taxpayer begins, was
107	107	21 received from the taxpayer.
108	108	22 "b. For tax years beginning after December 31, 2006,
109	109	23 for taxpayers with adjusted gross income equal to or less than
110	110	24 $20,000 twenty thousand dollars ($20,000), one thousand
111	111	25 dollars ($1,000) for each person other than husband or wife,
112	112	26 dependent upon the taxpayer, and over half of whose support,
113	113	Page 4 1 for the calendar year in which the taxable year for the
114	114	2 taxpayer begins, was received from the taxpayer.
115	115	3 "c. For tax years beginning after December 31, 2006,
116	116	4 for taxpayers with adjusted gross income in excess of $20,000
117	117	5 twenty thousand dollars ($20,000) and equal to or less than
118	118	6 $100,000 one hundred thousand dollars ($100,000), five hundred
119	119	7 dollars ($500) for each person other than husband and wife,
120	120	8 dependent upon the taxpayer, and over half of whose support,
121	121	9 for the calendar year in which the taxable year for the
122	122	10 taxpayer begins, was received from the taxpayer.
123	123	11 "For the purposes of this section, "dependent" shall
124	124	12 mean: A son or daughter of the taxpayer or a descendant of
125	125	13 either; a stepson or stepdaughter of the taxpayer; a brother,
126	126	14 sister, stepbrother, or stepsister of the taxpayer; the father
127	127	15 or mother of the taxpayer or an ancestor of either; a
128	128	16 stepfather or stepmother of the taxpayer; a son or daughter of
129	129	17 a brother or sister of the taxpayer; a brother or sister of
130	130	18 the father or mother of the taxpayer; a son-in-law,
131	131	19 daughter-in-law, father-in-law, mother-in-law, brother-in-law,
132	132	20 or sister-in-law of the taxpayer. As used in this paragraph
133	133	21 the terms "brother" and "sister" include a brother or sister
134	134	22 by the half blood. For the purpose of determining whether any
135	135	23 of the foregoing relationships exist, a legally adopted child
136	136	24 of a person shall be considered a child of such a person by
137	137	25 blood.
138	138	26 "(10) Beginning January 1, 1998, all income,
139	139	27 interest, dividends, gains, or benefits of any kind received
140	140	Page 5 1 from savings accounts or prepaid tuition contracts
141	141	2 administered under Title 16, Chapter 33C, are exempt from all
142	142	3 income taxation by the state and by all of its political
143	143	4 subdivisions to the extent that the amounts remain on deposit
144	144	5 in the PACT Trust Fund or the ACES Trust Fund, or are used to
145	145	6 pay the designated beneficiary's qualified higher education
146	146	7 expenses as defined in Section 529 of the Internal Revenue
147	147	8 Code of 1986, as amended, or are refunded under such terms as
148	148	9 would not carry a penalty under Section 529 of the Internal
149	149	10 Revenue Code of 1986, as amended.
150	150	11 "(11) Beginning January 1, 2016, all income,
151	151	12 interest, dividends, gains or benefits of any kind received
152	152	13 from ABLE savings accounts administered under Title 16,
153	153	14 Chapter 33C, are exempt from all income taxation by the state
154	154	15 and by all of its political subdivisions to the extent that
155	155	16 the amounts remain on deposit in the ABLE Trust Fund, or are
156	156	17 used to pay the designated beneficiary's qualified disability
157	157	18 expenses as defined in Section 529A of the Internal Revenue
158	158	19 Code of 1986, as amended, or are refunded under such terms as
159	159	20 would not carry a penalty under Section 529A of the Internal
160	160	21 Revenue Code of 1986, as amended, or other applicable federal
161	161	22 law.
162	162	23 "(12) Beginning January 1, 2018, amounts received by
163	163	24 an individual from sources within a foreign country or
164	164	25 countries which constitute a housing allowance, and earned
165	165	26 income attributable to services performed by such individual
166	166	27 received during the tax period are exempt from all income
167	167	Page 6 1 taxation by the state and by all of its political subdivisions
168	168	2 to the extent such income is exempt from federal income tax
169	169	3 pursuant to 26 U.S.C. Section 911.
170	170	4 "(13) a. Beginning January 1, 2023, 80 percent of
171	171	5 the distributions from a defined contribution deferred
172	172	6 compensation plan.
173	173	7 b. This exemption may only be claimed by individual
174	174	8 taxpayers who are 65 years of age or older, and in no event
175	175	9 shall a taxpayer be allowed to exempt more than 80 percent of
176	176	10 the distributions from a defined contribution deferred
177	177	11 compensation plan.
178	178	12 "(b) Of the following personal exemptions allowed
179	179	13 resident taxpayers, each nonresident individual taxpayer shall
180	180	14 be allowed that proportion thereof that the adjusted gross
181	181	15 income received by said nonresident individual taxpayer from
182	182	16 sources within the State of Alabama bears to his or her
183	183	17 adjusted gross income received from sources within and without
184	184	18 the State of Alabama: In the case of a single person or a
185	185	19 married person not living with husband or wife, a personal
186	186	20 exemption of one thousand five hundred dollars ($1,500) or, in
187	187	21 the case of a head of a family or a married person living with
188	188	22 husband or wife, a personal exemption of three thousand
189	189	23 dollars ($3,000), a husband and wife living together shall
190	190	24 receive but one personal exemption of three thousand dollars
191	191	25 ($3,000) against their aggregate income; and, in case they
192	192	26 make separate returns, each must claim a personal exemption of
193	193	27 one thousand five hundred dollars ($1,500); and the amount in
194	194	Page 7 1 subdivision (9) of subsection (a) for each person, other than
195	195	2 husband or wife, dependent upon and receiving his chief
196	196	3 support from the taxpayer."
197	197	4 Section 2. The Department of Revenue may enact rules
198	198	5 as necessary to implement and administer the provisions of
199	199	6 this act.
200	200	7 Section 3. This act shall become effective on the
201	201	8 first day of the third month following its passage and
202	202	9 approval by the Governor, or its otherwise becoming law.
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