Alabama 2025 Regular Session

Alabama House Bill HB379 Compare Versions

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

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1	1	HB379INTRODUCED
2	2	Page 0
3	3	HB379
4	4	ARRHKQQ-1
5	5	By Representative Garrett
6	6	RFD: Ways and Means Education
7	7	First Read: 04-Mar-25
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12	12	5 ARRHKQQ-1 02/27/2025 KHF (F)KHF 2025-1060
13	13	Page 1
14	14	First Read: 04-Mar-25
15	15	SYNOPSIS:
16	16	Under existing law, nonresident remote workers
17	17	are required to remit income tax in the State of
18	18	Alabama.
19	19	This bill would provide that remote workers are
20	20	exempt from income tax in the State of Alabama in
21	21	certain circumstances.
22	22	A BILL
23	23	TO BE ENTITLED
24	24	AN ACT
25	25	Relating to income taxes; to amend Section 40-18-2,
26	26	Code of Alabama 1975, regarding persons subject to income tax,
27	27	to exclude certain nonresidents; to add Section 40-18-2.2 to
28	28	the Code of Alabama 1975; to exempt certain nonresident income
29	29	from income tax.
30	30	BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
31	31	Section 1. Section 40-18-2, Code of Alabama 1975, is
32	32	amended as follows:
33	33	"§40-18-2
34	34	(a) In addition to all other taxes now imposed by law,
35	35	there is hereby levied and imposed a tax on the taxable
36	36	income, as defined in this chapter, which tax shall be
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66	66	income, as defined in this chapter, which tax shall be
67	67	assessed, collected, and paid annually at the rate specified
68	68	herein and for each taxable year as hereinafter provided.
69	69	Persons and subjects taxable under this chapter are:
70	70	(1) Every individual residing in the State of Alabama.
71	71	(2) Every corporation domiciled in the State of Alabama
72	72	or licensed or qualified to transact business in the State of
73	73	Alabama.
74	74	(3) Every corporation doing business in the State of
75	75	Alabama or deriving income from sources within the State of
76	76	Alabama, including income from property located in the State
77	77	of Alabama.
78	78	(4) Every nonresident estate or nonresident trust
79	79	receiving income from property owned or business transacted in
80	80	the State of Alabama.
81	81	(5) Every resident estate and resident trust.
82	82	(6) Every nonresident individual receiving income from
83	83	property owned or business transacted in the State of Alabama,
84	84	except as provided in Section 40-18-2.2 .
85	85	(b) Every natural person domiciled in the State of
86	86	Alabama, and every other natural person who maintains a
87	87	permanent place of abode within the state or spends in the
88	88	aggregate more than seven months of the income year within the
89	89	state, shall be presumed to be residing within the state for
90	90	the purposes of determining liability for income taxes under
91	91	this chapter."
92	92	Section 2. Section 40-18-2.2 is added to the Code of
93	93	Alabama 1975, as follows:
94	94	§40-18-2.2
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124	124	§40-18-2.2
125	125	(a) As used in this section, the following words have
126	126	the following meanings:
127	127	(1) "Professional athlete" means an athlete who
128	128	performs services in a professional athletic event for
129	129	compensation.
130	130	(2) "Professional entertainer" means a person who
131	131	performs services in the professional performing arts for
132	132	compensation on a per-event basis.
133	133	(3) "Public figure" means a person of prominence who
134	134	performs services at discrete events, such as speeches, public
135	135	appearances, or similar events, for compensation on a
136	136	per-event basis.
137	137	(b) Compensation subject to withholding pursuant to
138	138	Article 2, without regard to any withholding tax exception set
139	139	forth in this chapter, paid to a nonresident individual is
140	140	exempt from the tax levied under Article 2 if all of the
141	141	following conditions apply:
142	142	(1) The compensation is paid for employment duties
143	143	performed by the individual in this state on 24 or fewer days
144	144	in the calendar year.
145	145	(2) The individual performed employment duties in more
146	146	than one state during the calendar year.
147	147	(3) The compensation is not paid for employment duties
148	148	performed by the individual in the individual’s capacity as a
149	149	professional athlete, professional entertainer, or public
150	150	figure.
151	151	(4) The nonresident individual's state of residence:
152	152	a. Provides a substantially similar exclusion;
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182	182	a. Provides a substantially similar exclusion;
183	183	b. Does not impose an individual income tax; or
184	184	c. The individual's income is exempt from taxation by
185	185	this state under the United States Constitution or federal
186	186	statute.
187	187	(c) Except as otherwise provided in this chapter, an
188	188	employer is not required to withhold taxes from compensation
189	189	that is paid to an employee described in subsection (b). If,
190	190	during the calendar year, the number of days an employee
191	191	spends performing employment duties in this state exceeds the
192	192	24-day threshold described in subsection (b) of this section,
193	193	an employer shall withhold and remit tax to this state for
194	194	every day in that calendar year, including the first 24 days,
195	195	on which the employee performs employment duties in this
196	196	state.
197	197	(d) For purposes of determining compensation paid and
198	198	subject to withholding under this section:
199	199	(1) If an employer maintains a time and attendance
200	200	system that tracks where employees perform services on a daily
201	201	basis, then data from the time and attendance system shall be
202	202	used. For purposes of this section, time and attendance system
203	203	means a system:
204	204	a. In which the employee is required, on a
205	205	contemporaneous basis, to record the work location for every
206	206	day worked outside of the state where the employment duties
207	207	are primarily performed; and
208	208	b. That is designed to allow the employer to allocate
209	209	the employee’s wages for income tax purposes among all states
210	210	in which the employee performs services; and
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240	240	in which the employee performs services; and
241	241	(2) In all other cases, the employer shall obtain a
242	242	written statement from the employee of the number of days
243	243	reasonably expected to be spent performing services in this
244	244	state during the taxable year. Absent the employer's actual
245	245	knowledge of fraud or gross negligence by the employee in
246	246	making the determination or collusion between the employer and
247	247	the employee to evade tax, the certification so made by the
248	248	employee and maintained in the employer’s books and records
249	249	shall be prima facie evidence and constitute a rebuttable
250	250	presumption of the number of days spent performing services in
251	251	this state.
252	252	(e) For purposes of this section, an employee shall be
253	253	considered present and performing employment duties within
254	254	this state for a day if the employee performs more of the
255	255	employee’s employment duties in this state than in any other
256	256	state during that day. Any portion of the day during which the
257	257	employee is in transit shall not be considered in determining
258	258	the location of an employee’s performance of employment
259	259	duties.
260	260	(f) The Alabama Department of Revenue shall adopt rules
261	261	necessary for the administration of this section.
262	262	(g) The provisions of this section shall be effective
263	263	for tax years beginning on or after January 1, 2026.
264	264	Section 3. This act shall become effective on October
265	265	1, 2025.
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