Alabama 2025 Regular Session

Alabama House Bill HB467 Compare Versions

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

Old	New	Differences
1	1	HB467INTRODUCED
2	2	Page 0
3	3	HB467
4	4	CXD3HJQ-1
5	5	By Representatives Daniels, Stadthagen, Jackson, Lawrence,
6	6	Lands, Hall, Mooney, Travis, Yarbrough, McCampbell, Gray,
7	7	Chestnut, Clarke, Drummond, Forte, Warren, Rafferty, Ensler,
8	8	England, McClammy, Tillman, Givan, Hendrix, Boyd, Hassell,
9	9	Bracy, Hollis, Moore (M), Sellers, Datcher, Morris, Jones,
10	10	Lipscomb, Stringer
11	11	RFD: Ways and Means Education
12	12	First Read: 20-Mar-25
13	13	1
14	14	2
15	15	3
16	16	4
17	17	5
18	18	6
19	19	7
20	20	8
21	21	9
22	22	10 CXD3HJQ-1 03/17/2025 RA F DJ 2024-3245
23	23	Page 1
24	24	First Read: 20-Mar-25
25	25	SYNOPSIS:
26	26	Under existing law, amounts paid as overtime
27	27	compensation in accordance with the U.S. Fair Labor
28	28	Standards Act are excluded from calculation of gross
29	29	income through June 30, 2025.
30	30	This bill would remove the sunset provision for
31	31	this exemption.
32	32	This bill would require the Department of
33	33	Revenue and the Alabama Commission on the Evaluation of
34	34	Services to conduct an economic impact study of this
35	35	exemption.
36	36	This bill would also make nonsubstantive,
37	37	technical revisions to update the existing code
38	38	language to current style.
39	39	A BILL
40	40	TO BE ENTITLED
41	41	AN ACT
42	42	Relating to income taxes; to amend Section 40-18-14,
43	43	Code of Alabama 1975, as last amended by Acts 2024-437 and
44	44	2024-447, 2024 Regular Session; to remove the sunset provision
45	45	for the existing exemption of overtime compensation from
46	46	income tax; to require the Department of Revenue and the
47	47	1
48	48	2
49	49	3
50	50	4
51	51	5
52	52	6
53	53	7
54	54	8
55	55	9
56	56	10
57	57	11
58	58	12
59	59	13
60	60	14
61	61	15
62	62	16
63	63	17
64	64	18
65	65	19
66	66	20
67	67	21
68	68	22
69	69	23
70	70	24
71	71	25
72	72	26
73	73	27
74	74	28 HB467 INTRODUCED
75	75	Page 2
76	76	income tax; to require the Department of Revenue and the
77	77	Alabama Commission on the Evaluation of Services to conduct an
78	78	economic impact study on the effects of the exemption; to
79	79	require public posting of the study; and to make
80	80	nonsubstantive, technical revisions to update the existing
81	81	code language to current style.
82	82	BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
83	83	Section 1. Section 40-18-14, Code of Alabama 1975, as
84	84	last amended by Acts 2024-437, and 2024-447, 2024 Regular
85	85	Session, is amended to read as follows:
86	86	"§40-18-14
87	87	(a) The term "gross income" as used herein:
88	88	(1) Includes gains, profits , and income derived from
89	89	salaries, wages, or compensation for personal services of
90	90	whatever kind, or in whatever form paid, including the
91	91	salaries, income, fees, and other compensation of state,
92	92	county, and municipal officers and employees, or from
93	93	professions, vocations, trades, business, commerce or sales,
94	94	or dealings in property whether real or personal, growing out
95	95	of ownership or use of or interest in such property; also from
96	96	interest, royalties, rents, dividends, securities, or
97	97	transactions of any business carried on for gain or profit and
98	98	the income derived from any source whatever, including any
99	99	income not exempted under this chapter and against which
100	100	income there is no provision for a tax. The term "gross
101	101	income" as used herein also includes alimony and separate
102	102	maintenance payments to the extent they are includable in
103	103	gross income for federal income tax purposes under 26 U.S.C. §
104	104	71, relating to alimony and separate maintenance payments. The
105	105	29
106	106	30
107	107	31
108	108	32
109	109	33
110	110	34
111	111	35
112	112	36
113	113	37
114	114	38
115	115	39
116	116	40
117	117	41
118	118	42
119	119	43
120	120	44
121	121	45
122	122	46
123	123	47
124	124	48
125	125	49
126	126	50
127	127	51
128	128	52
129	129	53
130	130	54
131	131	55
132	132	56 HB467 INTRODUCED
133	133	Page 3
134	134	71, relating to alimony and separate maintenance payments. The
135	135	term "gross income" as used herein also includes any amount
136	136	included in gross income under 26 U.S.C. § 83 at the time it
137	137	is so included under 26 U.S.C. § 83.
138	138	(2) For purposes of this chapter, the reductions in tax
139	139	attributes required by 26 U.S.C. § 108 shall be applied only
140	140	to the net operating losses determined under this chapter and
141	141	the basis of depreciable property. The basis reductions of
142	142	depreciable property shall not exceed the basis reductions for
143	143	federal income tax purposes. All other tax attribute
144	144	reductions required by 26 U.S.C. § 108 shall not be
145	145	recognized.
146	146	(3) Gross income does not include the following items
147	147	which shall be exempt from income tax under this chapter:
148	148	a. Amounts received under life insurance policies and
149	149	contracts paid by reason of the death of the insured in
150	150	accordance with 26 U.S.C. § 101;
151	151	b. Amounts received, other than amounts paid by reason
152	152	of the death of the insured, under life insurance, endowment
153	153	or annuity contracts, determined in accordance with 26 U.S.C.
154	154	§ 72;
155	155	c. The value of property acquired by gift, bequest,
156	156	devise, or descent, but the income from such property shall be
157	157	included in the gross income, in accordance with 26 U.S.C. §
158	158	102;
159	159	d. Interest upon obligations of the United States or
160	160	its possessions; or securities issued under provisions of the
161	161	Federal Farm Loan Act of July 18, 1916;
162	162	e. Any amounts received by an individual which are
163	163	57
164	164	58
165	165	59
166	166	60
167	167	61
168	168	62
169	169	63
170	170	64
171	171	65
172	172	66
173	173	67
174	174	68
175	175	69
176	176	70
177	177	71
178	178	72
179	179	73
180	180	74
181	181	75
182	182	76
183	183	77
184	184	78
185	185	79
186	186	80
187	187	81
188	188	82
189	189	83
190	190	84 HB467 INTRODUCED
191	191	Page 4
192	192	e. Any amounts received by an individual which are
193	193	excludable from gross income under 26 U.S.C. § 104, relating
194	194	to compensation for injuries or sickness, or 26 U.S.C. § 105,
195	195	relating to amounts received under accident or health plans;
196	196	f. Interest on obligations of the State of Alabama and
197	197	any county, municipality, or other political subdivision
198	198	thereof;
199	199	g. The rental value of a parsonage provided to a
200	200	minister of the gospel to the extent excludable under 26
201	201	U.S.C. § 107;
202	202	h. Income from discharge of indebtedness to the extent
203	203	allowed by 26 U.S.C. § 108;
204	204	i. For each individual resident taxpayer, or each
205	205	husband and wife filing a joint income tax return, as the case
206	206	may be, any gain realized from the sale of a personal
207	207	residence of the taxpayer shall be excluded to the extent
208	208	excludable for federal income tax purposes under 26 U.S.C. §
209	209	121;
210	210	j. Contributions made by an employer on behalf of an
211	211	employee to a trust which is part of a qualified cash or
212	212	deferred arrangement, as defined in 26 U.S.C. § 401(k)(2) or 5
213	213	U.S.C. § 8437, under which the employee has an election
214	214	whether the contribution will be made to the trust or received
215	215	by the employee in cash and contributions made by an employer
216	216	for an employee for an annuity contract, which contributions
217	217	would be excludable from the gross income, for federal income
218	218	tax purposes, of the employee in accordance with the
219	219	provisions of 26 U.S.C. § 403(b). The limitations imposed by
220	220	26 U.S.C. § 402(g) shall apply for purposes of this paragraph;
221	221	85
222	222	86
223	223	87
224	224	88
225	225	89
226	226	90
227	227	91
228	228	92
229	229	93
230	230	94
231	231	95
232	232	96
233	233	97
234	234	98
235	235	99
236	236	100
237	237	101
238	238	102
239	239	103
240	240	104
241	241	105
242	242	106
243	243	107
244	244	108
245	245	109
246	246	110
247	247	111
248	248	112 HB467 INTRODUCED
249	249	Page 5
250	250	26 U.S.C. § 402(g) shall apply for purposes of this paragraph;
251	251	k. Amounts that an employee is allowed to exclude from
252	252	gross income for federal income tax purposes pursuant to 26
253	253	U.S.C. § 125, relating to cafeteria plans, and 26 U.S.C. §
254	254	132, relating to certain fringe benefits; and
255	255	l. Amounts paid or incurred by an employer on behalf of
256	256	an employee if the amounts may be excluded from gross income
257	257	for federal income tax purposes by an employee pursuant to 26
258	258	U.S.C. § 129, relating to dependent care expenses.
259	259	m.1.(i) Amounts received by a full-time hourly waged
260	260	paid employee as compensation for work performed in excess of
261	261	40 hours in a week.
262	262	(ii) The exemption provided pursuant to this
263	263	subparagraph shall be available for tax years that begin after
264	264	December 31, 2023, and end on October 1, 2024.
265	265	2.(i) Amounts paid as overtime compensation in
266	266	accordance with the U.S. Fair Labor Standards Act.
267	267	(ii) The exemption provided pursuant to this
268	268	subparagraph shall be available beginning on October 1, 2024 ,
269	269	through June 30, 2025 .
270	270	3.2. Notwithstanding subparagraph 2.1., for employers
271	271	governed by the National Railway Labor Act, the exemption
272	272	provided in this paragraph applies to hourly component
273	273	overtime compensation as defined in applicable collective
274	274	bargaining agreements.
275	275	4.3. Each employer shall submit to the Department of
276	276	Revenue, on forms prescribed by the department, all of the
277	277	following:
278	278	(i) For the tax year beginning January 1, 2023, the
279	279	113
280	280	114
281	281	115
282	282	116
283	283	117
284	284	118
285	285	119
286	286	120
287	287	121
288	288	122
289	289	123
290	290	124
291	291	125
292	292	126
293	293	127
294	294	128
295	295	129
296	296	130
297	297	131
298	298	132
299	299	133
300	300	134
301	301	135
302	302	136
303	303	137
304	304	138
305	305	139
306	306	140 HB467 INTRODUCED
307	307	Page 6
308	308	(i) For the tax year beginning January 1, 2023, the
309	309	total amount received by full-time hourly wage-paid employees
310	310	as compensation for work performed in excess of 40 hours in a
311	311	week and the total number of employees for which it was paid.
312	312	The data shall be due no later than January 31, 2024.
313	313	(ii) For the tax year beginning on or after January 1,
314	314	2024, through September 30, 2024, the total amount received by
315	315	full-time hourly wage-paid employees as compensation for work
316	316	performed in excess of 40 hours in a week. (i) Beginning on
317	317	October 1, 2024, and each year thereafter, the total amount
318	318	paid pursuant to this paragraph and the total number of
319	319	employees for which it was paid. The data shall be provided
320	320	monthly or quarterly and shall be due no later than the due
321	321	date for the corresponding monthly or quarterly withholding
322	322	tax returns.
323	323	(iii)(ii) Additional information as may be required by
324	324	the department.
325	325	5.4. The department shall report to the Legislative
326	326	Services Agency - Fiscal Division and the Department of
327	327	Finance the data collected and compiled pursuant to
328	328	subparagraph 4.3.and an estimate of the amount of income tax
329	329	revenue lost pursuant to this subparagraph, no later than 30
330	330	days after the due date of the data.
331	331	5. No later than January 1, 2026, the department, in
332	332	collaboration with the Alabama Commission on the Evaluation of
333	333	Services, shall conduct a study on the economic impact of this
334	334	exemption. The study shall include quantitative estimates of
335	335	the economic effects of the exemption. The term "economic
336	336	effects" shall be construed broadly and include, but is not
337	337	141
338	338	142
339	339	143
340	340	144
341	341	145
342	342	146
343	343	147
344	344	148
345	345	149
346	346	150
347	347	151
348	348	152
349	349	153
350	350	154
351	351	155
352	352	156
353	353	157
354	354	158
355	355	159
356	356	160
357	357	161
358	358	162
359	359	163
360	360	164
361	361	165
362	362	166
363	363	167
364	364	168 HB467 INTRODUCED
365	365	Page 7
366	366	effects" shall be construed broadly and include, but is not
367	367	limited to, the estimated effects of the exemption on consumer
368	368	spending trends. The department shall post a copy of the
369	369	economic impact study on the department's public website.
370	370	6. The provisions of Article 6, Chapter 29 of Title 40
371	371	shall apply to this paragraph.
372	372	n. Any net capital gain derived from the exchange of
373	373	precious metal bullion. For purposes of this paragraph,
374	374	"precious metal bullion" means coins, bars, or rounds
375	375	containing primarily refined gold, silver, platinum, or
376	376	palladium that is marked and valued primarily by its weight,
377	377	purity, and content.
378	378	(4) The term "gross income," in the case of a resident
379	379	individual, includes income from sources within and outside
380	380	Alabama, including , without limitation, the resident's
381	381	proportionate share of any income arising from a Subchapter K
382	382	entity, Alabama S corporation, or estate or trust, regardless
383	383	of the geographic source of the income. The term "gross
384	384	income," in the case of a nonresident individual, includes
385	385	only income from property owned or business transacted in
386	386	Alabama. For purposes of this article, "proportionate share"
387	387	shall be defined by reference to : (i) the status of the
388	388	individual owner as a partner or member of a Subchapter K
389	389	entity, shareholder of an Alabama S corporation, or
390	390	beneficiary of an estate or trust ,; and (ii) the allocable
391	391	interest in that entity owned by the individual.
392	392	(b) The Department of Revenue may adopt rules to
393	393	provide for the administration of this section."
394	394	Section 2. This act shall become effective on June 1,
395	395	169
396	396	170
397	397	171
398	398	172
399	399	173
400	400	174
401	401	175
402	402	176
403	403	177
404	404	178
405	405	179
406	406	180
407	407	181
408	408	182
409	409	183
410	410	184
411	411	185
412	412	186
413	413	187
414	414	188
415	415	189
416	416	190
417	417	191
418	418	192
419	419	193
420	420	194
421	421	195
422	422	196 HB467 INTRODUCED
423	423	Page 8
424	424	Section 2. This act shall become effective on June 1,
425	425	2025.197