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Alabamians gain tax relief during just-ended legislative session

Bills supported by Gov. Kay Ivey and approved by state lawmakers in the just-ended legislative session will provide tax relief for Alabama families, seniors and businesses.

Combined, the legislation is expected to save Alabama taxpayers more than $160 million, according to a statement from state Senate President Pro Tem Greg Reed.

“I am proud to say that the Alabama Senate stepped up to the plate in a major way in recent weeks to answer that urgent call, passing $160 million worth of annual tax cuts for hardworking Alabamians, small businesses and retirees across our state,” Reed said.

The tax relief includes:

  • Legislation sponsored by Sen. Dan Roberts of Mountain Brook that exempts Alabama families from paying state income taxes on the federal COVID relief benefits they received in 2021. A similar measure was passed by the Legislature last year.
  • Legislation that reduces and ultimately eliminates Alabama’s $100 minimum business privilege tax. The legislation is expected to save small businesses $23 million annually. The legislation was sponsored by state Rep. Steve Clouse of Ozark and Sen. Tom Butler of Madison.
  • Legislation by state Rep. Lynn Greer of Rogersville that allows up to $6,000 of taxable retirement income to be exempt from state income tax. The exemption applies to individuals who are 65 years of age or older and is expected to save seniors an estimated $28 million a year.
  • Greer also sponsored additional legislation that is expected to provide another $17 million in tax relief to low-income Alabamians and some retirees. The legislation increases the optional standard deduction by $1,000 for married taxpayers and by $500 for single or married filing separately and head-of-household taxpayers. It also increases the range of adjusted gross income to claim the maximum optional standard deduction and the dependent exemption.

Lawmakers also approved other tax revisions benefitting small businesses and farmers. The legislation was the result of recommendations from the Alabama Small Business Commission.

“Small business owners face a unique set of obstacles just to stay in business, and our commission is dedicated to removing those challenges so they can grow, thrive, expand and provide more jobs and opportunities for Alabamians,” said Rep. Danny Garrett of Trussville, chairman of the commission.

“Alabama recognizes better than any state in the nation that providing tax relief, when possible, is the right thing to do,” Ivey said after signing several of the measures. “I am committed to making sure Alabama is the best place to live, work and raise a family. I commend the Alabama Legislature for their hard work in providing tax relief to Alabamians.”