HB163INTRODUCED
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HB163
XNMS77Z-1
By Representative Faulkner
RFD: Financial Services
First Read: 04-Feb-25
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5 XNMS77Z-1 02/04/2025 RA (F)RA 2024-2947
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First Read: 04-Feb-25
SYNOPSIS:
Under the current provisions of the Code of
Alabama 1975, taxable income for corporate income is
defined as federal taxable income with certain
additions and deductions. Alabama's corporate income
tax law automatically conforms to federal corporate
income tax laws, including changes imposed by the
federal Tax Cuts and Jobs Act (TJCA).
Under 26 U.S.C § 174, as amended by the TJCA,
firms that invest in research and experimental
expenditures must amortize their costs over five years
for domestic expenses or fifteen years for foreign
expenses, beginning in 2022 and after.
This bill would decouple Alabama from the TCJA
amendment to 26 U.S.C. § 174, relating to the
amortization of research and experimental expenditures,
and allow research and experiments to be treated in the
same manner as provided in 26 U.S.C. § 174 prior to tax
year 2022.
A BILL
TO BE ENTITLED
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TO BE ENTITLED
AN ACT
Relating to income tax; to decouple Alabama from the
Tax Cuts and Jobs Act (TCJA) amendment, 26 U.S.C. § 174,
relating to the amortization of research and experimental
expenditures; and to allow for such expenditures to follow the
provisions of 26 U.S.C § 174 as they existed prior to tax year
2022.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. For tax years beginning on or after January
1, 2026, research and development expenses for Alabama income
tax purposes shall not follow the provisions of 26 U.S.C §
174, as amended by the Tax Cuts and Jobs Act (TCJA), P.L.
115-97. Taxpayers shall have the option to currently deduct
research and experimental expenditures or treat the
expenditures as deferred expenses in the same manner as
provided in 26 U.S.C § 174 prior to tax year 2022.
Section 2. The Department of Revenue may adopt rules
for implementation and administration of this act.
Section 3. This act shall become effective on October
1, 2025.
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