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Proposed legislation offers tax cuts for low income, retirees

Published: Dec. 17, 2021 at 7:15 PM CST
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MONTGOMERY, Ala. (WSFA) - Possible tax cuts on the way for low-income Alabamians and some retirees. It’s a part of proposed legislation some lawmakers have been working on for months. The two bills were filed by Sen. Arthur Orr.

“With inflation being what inflation is these days, we’ve all read about that, these people they’re losing purchasing power and being on a fixed income,” said Orr

The Senate Republican caucus released a brief synopsis of the legislative proposals:

“Senate Bill 18: Currently, distributions from defined contribution deferred compensation plans are treated as taxable income for Alabama income tax purposes. This bill would provide that up to $10,000 of those distributions is exempt from income tax for individuals who are 65 years of age or older. This exemption will be phased in over a two-year period.

“Senate Bill 19: Alabama taxpayers are allowed an optional standard deduction, as well as dependent exemptions in computing income subject to the tax. This bill would increase the optional standard deduction by the following amounts:

“· Married filing jointly - $1,000

“· Single, Married Filing Separate, and Head of Household - $500

“The bill would also increase the adjusted gross income range allowable for the maximum optional standard deduction to $35,000 (from $33,000) and the adjusted gross income range allowable for dependent exemption to $50,000 (from $20,000) to increase the threshold at which the state imposes individual income taxes.”

“We are in the best financial shape that we have been in in over a decade, since the great recession. And so is, as far as our fiscal health, we’re doing very well,” said Orr.

The senator contributes this in part to the COVID-19 relief money and the state’s conservative approach to budgeting it.

“We’ve had the help from the federal government sending checks to individuals, the child tax credit and putting a lot of money out there in the economy. And when that happens, people get their check, and then they go spend it and that means sales taxes,” said Orr.

As of now, there are no Democratic co-sponsors to the bills, but Orr says he hopes they will pass with bipartisan support.

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