Alabama 2023 Regular Session

Alabama Senate Bill SB234

Introduced

4/20/23

Refer

4/20/23

Caption

Relating to income tax and sales tax; proposing an amendment to Section 211.04 of the Constitution of Alabama of 2022, to eliminate the state income tax deduction for federal income taxes for individual taxpayers; and to eliminate the state sales tax on food.

Impact

If enacted, SB234 would mark a substantial shift in Alabama's tax framework. Eliminating the income tax deduction for federal taxes could lead to an increased tax liability for many individuals, as they would no longer benefit from this deduction when calculating their state income taxes. On the other hand, the removal of sales tax on food is expected to provide relief to residents by reducing the overall cost of living, particularly benefiting low- and middle-income families who rely heavily on food purchases. The amendment proposes a different economic environment for taxpayers, focusing on easing the burden of basic necessities while potentially increasing effective tax rates on income.

Summary

SB234, introduced in Alabama, proposes a significant amendment to the state's Constitution of 2022, specifically targeting income and sales taxes. The bill seeks to eliminate the provision that allows federal income tax to be deducted from Alabama's gross income when calculating the state income tax liability for individual taxpayers. Additionally, it aims to abolish the state's sales tax on food items, effective starting January 1, 2024. This dual approach seeks to alleviate some financial burdens on taxpayers by making food purchases exempt from sales tax while adjusting income tax calculations for individuals.

Contention

Debate surrounding SB234 is likely to focus on the potential economic ramifications of the proposed changes. Supporters argue that eliminating the sales tax on food is a necessary adjustment to make food more affordable, reflecting a commitment to supporting struggling families. However, critics may express concerns about the loss of the federal income tax deduction, arguing that this could disproportionately affect lower-income individuals and lead to a heavier tax burden across the board. The discussions may also touch on broader themes of tax fairness and the state’s fiscal capacity to maintain essential services without the revenue generated from these taxes.