SB297ENROLLED
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SB297
VXCJLVP-3
By Senator Melson
RFD: Finance and Taxation General Fund
First Read: 04-Apr-24
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First Read: 04-Apr-24
Enrolled, An Act,
Relating to state income tax for individuals; to amend
Section 40-18-14, as last amended by Act 2023-421, 2023
Regular Session, Code of Alabama 1975; to exclude net capital
gains derived from the exchange of precious metal bullion from
state income taxes.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. This act shall be known and may be cited as
the Sound Money Tax Neutrality Act.
Section 2. Section 40-18-14, as last amended by Act
2023-421, 2023 Regular Session, Code of Alabama 1975, is
amended to read as follows:
"§40-18-14
(a) The term "gross income" as used herein:
(1) Includes gains, profits and income derived from
salaries, wages, or compensation for personal services of
whatever kind, or in whatever form paid, including the
salaries, income, fees, and other compensation of state,
county, and municipal officers and employees, or from
professions, vocations, trades, business, commerce or sales,
or dealings in property whether real or personal, growing out
of ownership or use of or interest in such property; also from
interest, royalties, rents, dividends, securities, or
transactions of any business carried on for gain or profit and
the income derived from any source whatever, including any
income not exempted under this chapter and against which
income there is no provision for a tax. The term "gross
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income there is no provision for a tax. The term "gross
income" as used herein also includes alimony and separate
maintenance payments to the extent they are includable in
gross income for federal income tax purposes under 26 U.S.C. §
71, relating to alimony and separate maintenance payments. The
term "gross income" as used herein also includes any amount
included in gross income under 26 U.S.C. § 83 at the time it
is so included under 26 U.S.C. § 83.
(2) For purposes of this chapter, the reductions in tax
attributes required by 26 U.S.C. § 108 shall be applied only
to the net operating losses determined under this chapter and
the basis of depreciable property. The basis reductions of
depreciable property shall not exceed the basis reductions for
federal income tax purposes. All other tax attribute
reductions required by 26 U.S.C. § 108 shall not be
recognized.
(3) Gross income does not include the following items
which shall be exempt from income tax under this chapter:
a. Amounts received under life insurance policies and
contracts paid by reason of the death of the insured in
accordance with 26 U.S.C. § 101;
b. Amounts received, other than amounts paid by reason
of the death of the insured, under life insurance, endowment
or annuity contracts, determined in accordance with 26 U.S.C.
§ 72;
c. The value of property acquired by gift, bequest,
devise, or descent, but the income from such property shall be
included in the gross income, in accordance with 26 U.S.C. §
102;
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102;
d. Interest upon obligations of the United States or
its possessions; or securities issued under provisions of the
Federal Farm Loan Act of July 18, 1916;
e. Any amounts received by an individual which are
excludable from gross income under 26 U.S.C. § 104, relating
to compensation for injuries or sickness, or 26 U.S.C. § 105,
relating to amounts received under accident or health plans;
f. Interest on obligations of the State of Alabama and
any county, municipality, or other political subdivision
thereof;
g. The rental value of a parsonage provided to a
minister of the gospel to the extent excludable under 26
U.S.C. § 107;
h. Income from discharge of indebtedness to the extent
allowed by 26 U.S.C. § 108;
i. For each individual resident taxpayer, or each
husband and wife filing a joint income tax return, as the case
may be, any gain realized from the sale of a personal
residence of the taxpayer shall be excluded to the extent
excludable for federal income tax purposes under 26 U.S.C. §
121;
j. Contributions made by an employer on behalf of an
employee to a trust which is part of a qualified cash or
deferred arrangement, as defined in 26 U.S.C. § 401(k)(2) or 5
U.S.C. § 8437, under which the employee has an election
whether the contribution will be made to the trust or received
by the employee in cash and contributions made by an employer
for an employee for an annuity contract, which contributions
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for an employee for an annuity contract, which contributions
would be excludable from the gross income, for federal income
tax purposes, of the employee in accordance with the
provisions of 26 U.S.C. § 403(b). The limitations imposed by
26 U.S.C. § 402(g) shall apply for purposes of this paragraph;
k. Amounts that an employee is allowed to exclude from
gross income for federal income tax purposes pursuant to 26
U.S.C. § 125, relating to cafeteria plans, and 26 U.S.C. §
132,relating to certain fringe benefits; and
l. Amounts paid or incurred by an employer on behalf of
an employee if the amounts may be excluded from gross income
for federal income tax purposes by an employee pursuant to 26
U.S.C. § 129, relating to dependent care expenses.
m.1. Amounts received by a full-time hourly waged paid
employee as compensation for work performed in excess of 40
hours in a week.
2. The exemption provided pursuant to this paragraph
shall be available for tax years that begin after December 31,
2023, and end prior to June 30, 2025.
3. Each employer shall submit to the Department of
Revenue, on forms prescribed by the department, all of the
following:
(i) For the tax year beginning January 1, 2023, the
total amount received by full-time hourly wage-paid employees
as compensation for work performed in excess of 40 hours in a
week and the total number of employees for which it was paid.
The data shall be due no later than January 31, 2024.
(ii) For the tax year beginning on or after January 1,
2024, and each tax year thereafter, the total amount received
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2024, and each tax year thereafter, the total amount received
by full-time hourly wage-paid employees as compensation for
work performed in excess of 40 hours in a week and the total
number of employees for which it was paid. The data shall be
provided monthly or quarterly and shall be due no later than
the due date for the corresponding monthly or quarterly
withholding tax returns.
(iii) Additional information as may be required by the
department.
4. The department shall report to the Legislative
Services Agency - Fiscal Division and the Department of
Finance the data collected and compiled pursuant to
subparagraph 3. no later than 30 days after the due date of
such data.
n. Any net capital gain derived from the exchange of
precious metal bullion. For purposes of this paragraph,
"precious metal bullion" means coins, bars or rounds
containing primarily refined gold, silver, platinum, or
palladium that is marked and valued primarily by its weight,
purity, and content.
(4) The term "gross income," in the case of a resident
individual, includes income from sources within and outside
Alabama, including without limitation, the resident's
proportionate share of any income arising from a Subchapter K
entity, Alabama S corporation, or estate or trust, regardless
of the geographic source of the income. The term gross income,
in the case of a nonresident individual, includes only income
from property owned or business transacted in Alabama. For
purposes of this article, proportionate share shall be defined
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purposes of this article, proportionate share shall be defined
by reference to (i) the status of the individual owner as a
partner or member of a Subchapter K entity, shareholder of an
Alabama S corporation, or beneficiary of an estate or trust,
and (ii) the allocable interest in that entity owned by the
individual.
(b) The Department of Revenue may adopt rules to
provide for the administration of this section."
Section 3. This act shall become effective on January
1, 2025.
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1, 2025.
________________________________________________
President and Presiding Officer of the Senate
________________________________________________
Speaker of the House of Representatives
SB297
Senate 30-Apr-24
I hereby certify that the within Act originated in and passed
the Senate, as amended.
Patrick Harris,
Secretary.
House of Representatives
Passed: 07-May-24
By: Senator Melson
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