Title 40 — Title 40

Savings Accounts. (a) An individual taxpayer shall be allowed a deduction from gross income, regardless of whether the taxpayer itemizes income tax deductions in calculating the income tax imposed pursuant to Section 40- 18-5, for contributions made to an Alabama Achieving a Bett…

Repealed by Act 2006-503, p. 1145, §2, effective for tax years beginning after December 31, 2005. History: (Acts 1992, No. 92-605, §1.)

Contribution Designation. Repealed by Act 2006-503, p. 1145, §2, effective for tax years beginning after December 31, 2005. History: (Acts 1997, No. 97-631, p. 1145, §1.)

Repealed by Act 2006-503, p. 1145, §2, effective for tax years beginning after December 31, 2005. History: (Act 2001-465, p. 619, §1.)

Repealed by Act 2006-503, p. 1145, §2, effective for tax years beginning after December 31, 2005. History: (Act 2003-341, p. 850, §1.)

(a) Each Alabama state individual income tax return form for the 2009 tax year and each year thereafter shall contain a designation as follows: “Alabama Military Support Foundation, Incorporated. “Check ( ) if you wish to designate $1, $5, $10, or more of your state income tax re…

(a) Each Alabama state individual income tax return form for the 2010 tax year and each year thereafter shall contain a designation as follows: “Alabama Firefighters Annuity and Benefit Fund. “Check ( ) if you wish to designate $2 or more of your state income tax refund. “If join…

(a) Each Alabama state individual income tax return form for the 2012 tax year and each year thereafter shall contain a designation which allows each individual taxpayer to designate a contribution to the Alabama Veterinary Medical Foundation for the Spay-Neuter Program. (b) The …

(a) A minimum annual contribution of two dollars ($2) may be voluntarily contributed to the Alabama Association of Rescue Squads on the income tax return of the contributor by indicating on a check-off box which shall be provided. The check-off shall be described as the “Alabama …

(a) Basis for depreciation. The basis upon which exhaustion, wear and tear, depreciation and obsolescence are to be allowed shall be such reasonable allowance as may be determined by the Department of Revenue on the adjusted basis provided in Section 40-18-6 for the purpose of de…

(a) An Alabama S corporation shall not be subject to the tax imposed by Section 40-18-31. (b) For purposes of this chapter, an “Alabama S corporation” is a corporation: (1) With respect to which an election under 26 U.S.C. §1362 is in effect; or (2)a. With respect to which there …

(a) The taxable income of an Alabama S corporation shall be determined in the same manner as in the case of an individual except that the items determined in subdivision (1), subsection (a) of Section 40-18- 162 shall be separately stated, and the following deductions shall not b…

(a) In determining the tax of a shareholder for the shareholder’s taxable year in which the taxable year of the Alabama S corporation ends, or for the final taxable year of a shareholder who dies or of a trust or estate that terminates before the end of the corporation’s taxable …

Beneficiary. If an individual who is the spouse or lineal descendant or ancestor of one or more shareholders of an Alabama S corporation or who is a spouse, a lineal descendant or ancestor of a beneficiary of a trust which is a shareholder of an Alabama S corporation renders serv…

(a) The basis of each shareholder’s stock in an Alabama S corporation shall be increased for any period by the sum of the following items determined with respect to that shareholder for the period: (1) The items of income described in subdivision (1) of subsection (a) of Section …

(a) A distribution of property made by an Alabama S corporation with respect to its stock to which, but for this article, Section 40-18-36 would apply shall be treated in the manner provided in subsection (b) or (c) of this section, whichever applies. (b) In the case of a distrib…

Applicability of Subdivision (C)(1) of Section 40-18-165 to Certain Distributions; “Affected Shareholder” Defined. (a)(1) Except as provided in subsection (b), for purposes of this article, the term “accumulated adjustments account” means an account of the Alabama S corporation w…

Except to the extent inconsistent with this article, the rules of Article 1 of this chapter shall apply to an Alabama S corporation and its shareholders. History: (Code 1975, §40-14-97; Acts 1984, 1st Ex. Sess., No. 84-756, p. 121, §8; Acts 1997, No. 97- 625, p. 1048, §3.)

No carryforward and no carryback arising for a taxable year for which a corporation is not an Alabama S corporation may be carried to a taxable year which such corporation is an Alabama S corporation. No carryforward and no carryback shall arise at the corporate level for a taxab…

(a) Except as provided in subsections (b) and (c) of this section, no adjustment shall be made to the earnings and profits of an Alabama S corporation. (b) In the case of any transaction involving redemption, liquidation, reorganization or division of any Alabama S corporation, p…

In computing net income, no deduction shall in any case be allowed in respect of personal, living, or family expense; any amount paid out for new buildings or for permanent improvements or betterment made to increase the value of any property or estate; any amount expended in res…

Defined. For purposes of applying the provisions of this chapter which relate to employee fringe benefits, the Alabama S corporation shall be treated as a partnership, and any two-percent shareholder of the Alabama S corporation shall be treated as a partner of such partnership. …

(a) For purposes of this article, except as provided in subsection (b), each shareholder’s pro rata share of any item for any taxable year shall be the sum of the amounts determined with respect to the shareholder by assigning an equal portion of the item to each day of the taxab…

(a) For purposes of this article, the term “post-termination transition period” means: (1) The period beginning on the day after the last day of the corporation’s last taxable year as an Alabama S corporation and ending on the later of: a. The day which is one year after the last…

Due consideration shall be given in the interpretation of this article to applicable sections of the U.S. Internal Revenue Code in effect from time to time, its rulings and regulations provided such Code, rulings, and regulations are not in direct conflict with any portion of thi…

(a) If for any taxable year beginning in the recognition period an Alabama S corporation has a net recognized built-in gain, there is hereby imposed a tax (computed under subsection (b)) on the income of such corporation for such taxable year. (b)(1) The amount of the tax imposed…

Earnings and Profits Exceeds 25 Percent of Gross Receipts. (a) If for the taxable year an Alabama S corporation has accumulated earnings and profits at the close of the taxable year derived from years during which the corporation was an Alabama C corporation, and gross receipts m…

(a) The Department of Revenue shall permit an Alabama S corporation to file composite returns and to make composite payments on behalf of some or all of its nonresident shareholders if there are one or more nonresident shareholders during any part of the taxable year. The Departm…

Repealed by Act 98-502, § 2. History: (Acts 1943, No. 470, p. 434.)

AMENDED BY ACT 2026-603, EFFECTIVE OCTOBER 1, 2026. SEE ACT FOR REVISED LANGUAGE. (a) The following exemptions from income taxation shall be allowed to every individual resident taxpayer: (1) Retirement allowances, pensions and annuities, or optional allowances, approved by the B…

(a) Effective for the 1997 state income tax year and through tax year ending December 31, 2019, an amount up to twenty-five thousand dollars ($25,000) received as severance, unemployment compensation or termination pay, or as income from a supplemental income plan, or both, by an…

Duty. (a) Effective for the 2006 state income tax year and each year thereafter, any death benefit payments listed in subsection (e) that are paid to the designated beneficiary of a peace officer or fireman killed in the line of duty, as determined by the awarding authority, shal…

Emergency, or Rescue Calls. (a) A volunteer first responder, as defined in Section 9-3-18.1, shall be entitled to a state income tax credit for the use of his or her personal motor vehicle to respond to fire, emergency, and rescue calls. The tax credit shall be effective beginnin…

REPEALED IN THE 2015 REGULAR SESSION BY ACT 2015-27 EFFECTIVE JULY 2, 2015. History: (Acts 1995, No. 95-187, p. 250, §1; Acts 1997, No. 97-446, p. 765, §1; Act 2001-965, 3rd Sp. Sess., p. 854, §1; Act 2008-275, p. 402, §10; Act 2009-722, p. 2143, §2; Act 2012-54, p. 76, §1; Act 2…

REPEALED IN THE 2015 REGULAR SESSION BY ACT 2015-27 EFFECTIVE JULY 2, 2015. History: (Acts 1995, No. 95-187, p. 250, §2.)

Generated and Allocation of Credit. REPEALED IN THE 2015 REGULAR SESSION BY ACT 2015-27 EFFECTIVE JULY 2, 2015. History: (Acts 1995, No. 95-187, p. 250, §3.)

REPEALED IN THE 2015 REGULAR SESSION BY ACT 2015-27 EFFECTIVE JULY 2, 2015. History: (Acts 1995, No. 95-187, p. 250, §4; Acts 1997, No. 97-446, p. 765, §1; Act 2001-965, 3rd Sp. Sess., p. 854, §1; Act 2009-722, p. 2143, §2; Act 2012-210, p. 351, §2; Act 2012-436, p. 1215, §2.)

REPEALED IN THE 2015 REGULAR SESSION BY ACT 2015-27 EFFECTIVE JULY 2, 2015. History: (Act 2012-436, p. 1215, §3.)

REPEALED IN THE 2015 REGULAR SESSION BY ACT 2015-27 EFFECTIVE JULY 2, 2015. History: (Acts 1995, No. 95-187, p. 250, §5; Act 2003-375, p. 1062, §1; Act 2008-275, p. 402, §10; Act 2009-722, p. 2143, §2; Act 2012-385, p. 1025, §1.)

REPEALED IN THE 2015 REGULAR SESSION BY ACT 2015-27 EFFECTIVE JULY 2, 2015. History: (Acts 1995, No. 95-187, p. 250, §6.)

Group 2121. REPEALED IN THE 2015 REGULAR SESSION BY ACT 2015-27 EFFECTIVE JULY 2, 2015. History: (Act 2012-54, p. 76, §§2-4.)

REPEALED IN THE 2015 REGULAR SESSION BY ACT 2015-27 EFFECTIVE JULY 2, 2015. History: (Acts 1995, No. 95-187, p. 250, §7.)

REPEALED IN THE 2015 REGULAR SESSION BY ACT 2015-27 EFFECTIVE JULY 2, 2015. History: (Acts 1995, No. 95-187, p. 250, §8; Acts 1997, No. 97-446, p. 765, §1.)

REPEALED IN THE 2015 REGULAR SESSION BY ACT 2015-27 EFFECTIVE JULY 2, 2015. History: (Acts 1995, No. 95-187, p. 250, §9; Acts 1997, No. 97-446, p. 765, §1.)

REPEALED IN THE 2015 REGULAR SESSION BY ACT 2015-27 EFFECTIVE JULY 2, 2015. History: (Acts 1995, No. 95-187, p. 250, §10.)

(a) In addition to all other taxes now imposed by law, there is hereby levied and imposed a tax on the taxable income, as defined in this chapter, which tax shall be assessed, collected, and paid annually at the rate specified herein and for each taxable year as hereinafter provi…

All income earned from any missionary service rendered by a foreign missionary while he or she is physically present in a foreign country or countries for a minimum of 24 months and is employed or appointed by a church or other like religious organization is hereby exempted from …

(a) As used in this section, the following words have the following meanings: (1) PROFESSIONAL ATHLETE. An athlete who performs services in a professional athletic event for compensation. (2) PROFESSIONAL ENTERTAINER. An individual who performs services in the professional perfor…

(a) The first $4,750 retirement or compensation received as retirement benefit from the military services by any person retired from the military services of the United States of America and survivor benefits derived therefrom is hereby exempt from any state, county or municipal …

Elect to Receive Credit Under Article. REPEALED IN THE 2015 REGULAR SESSION BY ACT 2015-27 EFFECTIVE JULY 2, 2015. History: (Acts 1995, No. 95-187, p. 250, §11.)