Title 40 — Title 40

For the purpose of this chapter, the following terms shall have the respective meanings ascribed by this section: (1) ADVANCED FOSSIL-BASED GENERATION. The production of electricity from fossil-based generation with the use of technology or efficiency improvements to control or r…

(a) For purposes of this chapter, the statement that gain, loss, income, basis, earnings and profits, or any other item shall be determined in accordance with a specified section or sections of Title 26 United States Code (26 U.S.C.) or a specified federal public law (Pub. L. or …

For the purposes of this article, the following terms shall have the following meanings: (1) CLAIMANT AGENCY. Any of the following: a. The Alabama Commission on Higher Education with respect to the collection of debts under either of the following: 1. The Alabama Student Grant Pr…

The collection remedy authorized by this article is in addition to and not in substitution for any other remedy available by law. History: (Acts 1981, No. 81-696, p. 1168, §1.)

(a) A claimant agency may submit debts in excess of $25 to the department for collection through setoff, under the procedure established by this article, except in cases where the validity of the debt is legitimately in dispute, an alternate means of collection is pending and bel…

(a) A county or municipality may submit a debt of at least $25 owed to it for collection under this chapter. Provided, however, that a county or municipality must submit the debt to the department through one of the following: (1) The Association of County Commissions of Alabama …

(a) When the claimant agency receives a protest or application in writing from a taxpayer within 30 days of the notice issued by the department pursuant to subsection (c) of Section 40-18-103, the claimant agency shall set a date to hear the protest and give notice to the taxpaye…

(a) Upon final determination of the amount of the debt due and owing by means of a hearing provided by Section 40-18-104 or by the taxpayer’s default through failure to comply with Section 40-18-103 mandating timely request for review, the claimant agency shall remove the amount …

The department has priority over every claimant agency for collection by setoff under this article. History: (Acts 1981, No. 81-696, p. 1168, §1.)

(a) Notwithstanding any confidentiality statute, the Commissioner of Revenue may provide to a claimant agency all information necessary to accomplish and effectuate the intent of this article. (b) The information obtained by a claimant agency from the department in accordance wit…

When the setoff authorized by this article is exercised, the refund which is set off shall be deemed granted. History: (Acts 1981, No. 81-696, p. 1168, §1.)

In those cases where the amount claimed to be due and owing by the claimant agency is less than the refund due the taxpayer the State Treasurer is authorized upon the request of the department to issue two warrants, one payable to the claimant agency for the amount claimed to be …

Whenever in the opinion of the Department of Revenue the use of inventories is necessary in order clearly to determine the income of any taxpayer, the inventory shall be taken by such taxpayer in accordance with the methods and procedures prescribed in 26 U.S.C. §§263A, 471, 472,…

(a) The fee charged to the department by the United States Department of the Treasury to intercept a federal income tax refund and forward it to the department to pay any unpaid Alabama tax liability that is eligible to be submitted to the United States Department of the Treasury…

(a) As used in this article, the following terms have the following meanings: (1) MANUFACTURED HOME. Any structure built to the Manufactured Home Construction and Safety Standards which displays a red certification label on the exterior of each transportable section. (2) PRIMARY …

Repealed by Act 98-502, § 2. History: (Acts 1935, No. 194, p. 256; Code 1940, T. 51, §382.)

Repealed by Act 98-502, §2. History: (Acts 1981, No. 81-479, p. 831.)

Repealed by Act 98–502, §2. History: (Acts 1981, No. 81-480, p. 834.)

(a) Income shall be computed on the basis of the same taxable year and in accordance with the same method of accounting that the taxpayer properly employs for federal income tax purposes. If no such method of accounting has been employed or if the method so employed does not clea…

REPEALED BY ACT 2023-546, EFFECTIVE DECEMBER 1, 2028 UNLESS EXTENDED BY AN ACT OF THE LEGISLATURE.V It is the intent of the Legislature to institute programs that will make Alabama more competitive with other states in the recruitment and retention of physicians and reduce inequi…

REPEALED BY ACT 2023-546, EFFECTIVE DECEMBER 1, 2028 UNLESS EXTENDED BY AN ACT OF THE LEGISLATURE. For the purposes of this article, the following words have the following meanings, respectively, unless the context clearly indicates otherwise: (1) RURAL PHYSICIAN. A physician lic…

REPEALED BY ACT 2023-546, EFFECTIVE DECEMBER 1, 2028 UNLESS EXTENDED BY AN ACT OF THE LEGISLATURE. Beginning with the 1994 tax year, a person qualifying as a rural physician shall be allowed a credit against the tax imposed by Section 40-18-2, in the sum of $5,000. No credit shal…

(a) The Rural Physician Tax Credit, Article 4A, commencing with Section 40-18-130, Chapter 18, of Title 40, is repealed effective December 31, 2028, unless extended by an act of the Legislature prior to that date for no more than five additional years. (b) The repealing of the in…

The following definitions apply to this article: (1) APPROVED BASIC SKILLS EDUCATION PROGRAM. A basic skills education program that has received written approval from the Alabama Department of Education pursuant to this article. (2) BASIC SKILLS EDUCATION PROGRAM. An approved emp…

Beginning with tax year 1993, a tax credit of 20 percent of the actual costs of education shall be provided to an employer who provides or sponsors an approved basic skills education program pursuant to this article. History: (Acts 1993, 1st Ex. Sess., No. 93-907, p. 204, §2.)

The tax credit available to an employer pursuant to this article shall be limited to the amount of the employer’s income tax liability for the taxable year as computed without regard to this article. History: (Acts 1993, 1st Ex. Sess., No. 93-907, p. 204, §3.)

The Alabama Department of Education shall promulgate and adopt rules regarding the methods, procedures, and standards it deems necessary for approving employer provided or employer sponsored basic skills education programs. The Department of Education shall include in its rules a…

No tax credit shall be granted pursuant to this article to any employer of an employee participating in a basic skills education program if the employer receives or requires reimbursement or any form of remuneration for any cost of the education. History: (Acts 1993, 1st Ex. Sess…

(a) The term “gross income” as used herein: (1) Includes gains, profits and income derived from salaries, wages, or compensation for personal services of whatever kind, or in whatever form paid, including the salaries, income, fees, and other compensation of state, county, and mu…

Notwithstanding any other laws, all deferred compensation plans for public or private employees authorized in this state shall receive the same tax deferred treatment for state income tax purposes which the plan receives from the Internal Revenue Service for federal income tax pu…

(a) The term “adjusted gross income,” as used in this section, shall mean the gross income as defined by Section 40-18-14, minus the following deductions: (1) The deductions allowed by this chapter, other than the net operating loss deduction allowed under Section 40-18-15.2, whi…

Gross income shall include original issue discount determined in accordance with 26 U.S.C. §§1271 to 1275, inclusive, and interest or other income determined in accordance with 26 U.S.C. §7872, related to certain related party loans, tax avoidance loans, etc. with below-market in…

(a)(1) Each Alabama resident individual income taxpayer desiring to contribute to any of the programs listed in subsection (b) may designate an amount of his or her refund, rounded off in whole dollars, in an appropriate box on the state income tax return form, to be credited to …

Repealed by Act 2006-503, p. 1145, §2, effective for tax years beginning after December 31, 2005. History: (Acts 1982, No. 82-385, p. 562, §2.)

Repealed by Act 2006-503, p. 1145, §2, effective for tax years beginning after December 31, 2005. History: (Acts 1982, No. 82-424, p. 666, §1.)

Repealed by Act 2006-503, p. 1145, §2, effective for tax years beginning after December 31, 2005. History: (Acts 1982, No. 82-424, p. 666, §2.)

Repealed by Act 2006-503, p. 1145, §2, effective for tax years beginning after December 31, 2005. History: (Acts 1982, No. 82-424, p. 666, §3.)

Conservation and Natural Resources. Repealed by Act 2006-503, p. 1145, §2, effective for tax years beginning after December 31, 2005. History: (Acts 1982, No. 82-424, p. 666, §4.)

Return; Disposition of Contributions. (a) For purposes of this article, the term “political party” shall be defined as provided in Section 17-16-2. (b) Every individual who files a state income tax return may designate a contribution to a political party as provided under this se…

Repealed by Act 2006-503, p. 1145, §2, effective for tax years beginning after December 31, 2005. History: (Acts 1984, No. 84-247, p. 389; Act 2000-717, p. 1539, §1.)

Repealed by Act 2006-503, p. 1145, §2, effective for tax years beginning after December 31, 2005. History: (Acts 1988, 1st Ex. Sess., No. 88-853, p. 325.)

Repealed by Act 2006-503, p. 1145, §2, effective for tax years beginning after December 31, 2005. History: (Acts 1990, No. 90-387 p. 529.)

2026.] AMENDED BY ACT 2026-604, EFFECTIVE OCTOBER 1, 2026. SEE ACT FOR REVISED LANGUAGE. (a) No deduction shall be allowed for any losses, expenses, or interest deferred or disallowed pursuant to 26 U.S.C. § 267 or for any cost required to be capitalized in accordance with 26 U.S…

For purposes of this chapter, the term “taxable income” or “net income” shall mean “gross income,” as defined in Section 40-18-14, less the deductions allowed to individuals by this chapter. History: (Act 98-502, p. 1083, §1.)

Individuals may calculate a net operating loss from a trade or business and apply the net operating loss against prior taxable income or future taxable income pursuant to this section. (1) For purposes of this section, the term “net operating loss” means the excess of the deducti…

(a) As used in this section, the following terms shall have the following meanings: (1) QUALIFYING EMPLOYEES. Alabama resident employees who are employed by qualifying employers, earn no more than $50,000 of wages in the applicable tax year, and report no more than $75,000 of adj…

Underwriting Association Zone. (a) An individual taxpayer, whose legal residence is located in an Alabama Insurance Underwriting Association zone pursuant to Section 27-1-17, shall be allowed a deduction from taxable income, regardless of whether the taxpayer itemizes his or her …

(a) Any individual taxpayer, whose legal residence is located in Alabama, shall be allowed a deduction from taxable income, regardless of whether the taxpayer itemizes his or her income tax deductions, in calculating the income tax imposed pursuant to Section 40-18-5, for certain…

(a) For the purposes of this section, health savings account contributions are defined as contributions made by a taxpayer to his or her health savings account up to the maximum amount allowed pursuant to 26 USC §223. (b) Alabama residents will be allowed to deduct contributions …

(a) A person qualifying for the optional increased standard deduction is an Alabama resident, single person, or married persons filing a joint return that meet all of the following criteria: (1) Alabama gross income of less than one hundred thousand dollars ($100,000). (2) Zero d…