On Thursday, both Houses of the Alabama Legislature passed bills from the other House that would make American Rescue Plan Act (ARPA) funds that most Alabamians received in the form of advance tax credits non-taxable, under Alabama’s 5% state income tax.
State Sen. Dan Roberts (R-Mountain Brook) carried House Bill 231 by State Rep. Jim Carns (R-Vestavia) in the Senate, while Carns carried Roberts Senate Bill 152 in the House of Representatives.
The legislation provides an exclusion from state income taxes of enhanced federal child tax credits from ARPA.
In 2021, the U.S. Congress passed ARPA. Americans received tax credit stimulus checks, many wired straight into their accounts. This bipartisan legislation would allow Alabamians to keep all of that money without having to pay Alabama state income tax on it.
Carns told the House that it would mean tax savings for Alabamians of $87 million.
While a tax cut, this was money that the state legislature had not anticipated coming in, thus none of that revenue is included in any of the budget preparations.
“The fiscal note is zero,” Roberts told 1819 News. “We never planned on this. This is money we did not budget for.
“This is for people who were working and making less than $150,000 per year,” Roberts said. “That is 85, perhaps 90% of the people of Alabama."
Carns said that Alabamians who have already filed their taxes will need to file an amended return in order to get this money back.
The House voted 99 to zero to pass SB152.
The Senate voted 29 to zero to pass HB231.
Both bills have been sent to the Governor for her consideration.
In addition to this $87 million of one-time tax relief, the legislature is working on a package of $100 million of continuing tax relief targeted towards businesses, working families, and retirees.
Tuesday will be day 13 of the 2022 Alabama Regular Legislative Session.
To connect with the author of this story, or to comment, email brandon.moseley@1819News.com.