2023 Alabama Legislative Session Recap

The 2023 Alabama Legislative Session recently concluded after much activity. This blog post explores an incoming tax rebate and key tax changes to overtime pay, sales tax exemptions for tax-exempt construction projects, the Alabama Historic Rehabilitation Tax Credit, and sales tax on groceries.

These measures are intended to promote the state economy and offer financial assistance to taxpayers. Discover how the tax alterations will affect you and your business.

Individual Tax Rebates

• Beginning November 30, 2023, Alabama tax rebate checks will be issued to taxpayers with $150 provided to single filers and $300 to couples filing a joint return

• To be eligible for this payment, taxpayers must have filed a 2021 Alabama income tax return on or before October 17, 2022

Overtime Pay Income Tax Exemption

• New legislation will exempt overtime pay from the state’s five percent income tax beginning in the 2024 tax year

• This tax cut will expire in June of 2025 unless renewed by lawmakers

• The Department of Revenue is instructed to create rules for the implementation

Contractor Sales Tax Exemption for Tax-Exempt Projects

• Beginning in 2024, contractors and subcontractors may now apply for project-specific sales tax exemption certificates for projects on behalf of statutorily tax-exempt entities

• This process was previously available only to certain government projects unless the contractor was appointed as a purchasing agent

Alabama Historic Rehabilitation Tax Credit

• The annual cap of available credits has been increased from $20 million to $25 million to help reduce the backlog of qualified applications

• The credit is now tied to the year in which the reservation is allocated rather than the year the building is placed in service

Grocery Sales Tax

• The state tax on specified food items will be cut from four percent to three percent beginning on September 1, 2023

• Only foods that qualify under the Supplemental Nutrition Assistance Program (SNAP) are eligible for the reduction

• It is eligible to drop another percentage point if certain budgetary items are met

Are you staying ahead? Consult your Wilkins Miller advisor to make the most of tax changes and updates.