The Alabama Senate Finance and Taxation Education Committee gave a favorable report to a bill that would free Alabamians who received American Rescue Act funds from paying state income taxes.
Senate Bill 152 is sponsored by State Sen. Dan Roberts (R-Mountain Brook).
SB152 provides an exclusion from state income taxes of enhanced federal child tax credits from the American Rescue Plan Act.
In 2021, the U.S. Congress passed the American Rescue Plan Act. Americans received tax credit stimulus checks, many wired straight into their accounts. Roberts’ bill would allow Alabamians to keep all of that money without having to pay Alabama state income tax on it.
Roberts told 1819 News it would mean a tax savings for Alabamians of $87 million.
“The fiscal note is zero,” Roberts said. “We never planned on this. This is money we did not budget for.”
The Senate Finance and Taxation Education Committee is chaired by State Sen. Arthur Orr (R-Decatur).
“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 (who make less than $150,000 and pay taxes on their earnings.)
"Those people were in the workforce. I have had it with paying people to lay around the house (and therefore should have to pay taxes on their stimulus checks)."
State Rep. Arnold Mooney (R-Indian Springs) told 1819 News that he and Rep. Jim Carns (R-Vestavia) are carrying the bill in the House.
“This is the right thing to do," Roberts said. “My colleagues understand it and once I get it explained, the House members will too."
Roberts told the committee that the federal government spent $2 billion in the state in American Rescue Plan Act funds.
“I believe they [families] can spend it better than we can,” Roberts said.
State Sen. Rodger Smitherman (D-Birmingham) said, “I want to thank you for sharing with me this legislation and allowing me to cosponsor it. This is a great bill. You are to be commended on your efforts to help people.”
The committee gave SB 12 to 0.
SB152 could be considered by the full Alabama Senate as soon as Thursday.
Roberts said that Alabama taxpayers should wait to file their taxes in order to get the full benefit. A filer who files before it is made law would have to file an amended return in order to get the reduction.
Thursday is day six of the 2022 regular session.
To connect with the author of this story, or to comment, email [email protected].