New tax relief laws help Alabamians save money

MONTGOMERY, Ala. (WSFA) - If you forgot to file your taxes by the traditional April 15 deadline, you were in luck for 2022. It was extended to Monday, April 18.

While the day has arrived to pay your federal taxes, Alabama has an automatic six-month extension to file. That means more money could stay in your wallet this tax season after bills from the 2022 legislative session provided financial relief for some Alabamians and their businesses.

“There’s like 23,000 businesses in the state that this will affect,” said state Rep. Steve Clouse, R-District 93, “so it’s, it’s a pretty big hit to the general fund.”

How big of a hit? About $23 million from phasing out the $100 minimum business privilege tax.

“We’ve done well in our budgets here over the last couple of years,” said Clouse, who believes the state can afford to take the hit, not just for businesses, but for Alabamians as well.

“There’s the number of tax relief efforts that are, that have been proposed and passed this year,” said Clouse, “I think totals around $160 million.”

Not all of the tax relief will affect this year, but refunds on average are higher across the nation.

“Looking at our average refunds this year, as compared to last year, it’s a little skewed,” said Kathleen Abrams, the director of the Income Tax Administration Division of the Alabama Department of Revenue.

Abrams said one of the reasons for that is Act 22-37. Signed by Gov. Kay Ivey, Alabama families who got the federal child tax credit will have a higher federal income tax deduction, covered by the state’s general fund.

Other personal income taxes expected in the future include:

6 signed before April 11:

HB391 – Rep. Clouse – Business privilege tax
HB171 – Rep. South - Amendments to first-time and second chance home buyers program
HB262 – Rep. Allen - Taxes and registration fees for trucks/tractors in the forestry industry
HB10 – Rep. Brown – Tax exemption for commercial fishing vessels and equipment
HB82 – Rep. Garrett – Small Business Relief and Revitalization Act of 2022
HB231 – Rep. Carns – State taxation of ARPA-expanded tax credits

9 signed on April 11:

(HB162) Exemption of the first $6,000 of taxable retirement income for taxpayers ages 65 or older, beginning January 1, 2023;
(HB163, SB19) Increasing the standard deduction for married taxpayers filing a joint return by $1,000, and for single, head of family, and married filing separately by $500, and, increasing the gross income qualifying threshold for the $1,000 dependent exemption from $20,000 to $50,000, allowing more taxpayers to qualify;
(HB400) Exemption from ad valorem tax of grain bins used exclusively for the purpose of storing, holding, drying, preserving, or otherwise preparing a grain for market;
(HB415) Prohibiting a county from charging any license or fee for the sale of farm products produced by a farmer or others engaged in the production of farm products;
(SB274) Exemption of sales and use tax on the sale of producer value-added agricultural products (such as jam made by the producer from the producer’s own fruits) when the sale is made by the producer, family member, or employee, beginning October 1, 2022, and ending September 20, 2027;
(HB487) Increasing the one-time credit available for adopting a child to $2,000 if the child is an Alabama resident, available from January 1, 2023, through December 31, 2027;
(HB253) Providing an annual income tax credit of $300-$600 for certain active firefighters and paramedics who receive certain types of training, available from January 1, 2023, through December 31, 2027;
(HB20) Providing an extension of the sales tax exemption for the sale of parts, components, and systems of certain military aircraft through May 30, 2027.

Additional tax relief bills signed since April 11:

SB13 – Sen. Melson – Tax exemptions for bullion
HB382 – Rep. Blackshear – Travel trailer sales tax exemptions
SB261 – Sen. Roberts – Accountability Act tax credit expansion

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