Alabama Gov. Kay Ivey (R) signed House Bill 82 (HB82), the Small Business Relief and Revitalization Act of 2022 into law.
HB82 is sponsored by State Rep. Danny Garrett (R–Trussville). The bipartisan legislation provides immediate tax relief for Alabama small businesses.
“Small businesses are the pillars of our communities and Alabama’s economy," said Ivey. "The Small Business Relief and Revitalization Act will provide much-needed and deserved tax relief for these folks. I am grateful to the Alabama Legislature for getting this important piece of legislation across the finish line. I look forward to continually supporting Alabama’s many small businesses.”
"The guts of the bill is the relief provided to small businesses,” Garrett said.
Garrett explained in committee in the House that HB82 would provide an exemption of up to $40,000 in tangible business personal property from state ad valorem tax, beginning Oct. 1, 2023.
This is the tax that a business owner pays on all the chairs, tables, ovens, computers, tools, desks, furniture, etc., that it owns for the purpose of conducting the business, whether the business is making money or not.
“Collectively, this is $4 million that the state is collecting and it probably costs the businesses more than that to prepare the returns,” Garrett said. “75% of business filers would no longer have to pay personal business property taxes to the state.”
Garrett explained that businesses would still owe local business property taxes unless the local governments similarly raise the threshold.
It also provides that any amount of cancellation of indebtedness income resulting from loan forgiveness for disadvantaged farmers and ranchers, provided under Section 1005 of the federal American Rescue Plan Act (ARPA), shall not be treated as income under state income taxes.
The legislation also increases the threshold for sales tax collections for business filers that have to file sales taxes quarterly. Many more small businesses would just have to file annually.
Garrett said that the sales tax provision would apply to “2,500 businesses across the state.”
HB82 also allows businesses to pay their tax bill in cash instead of a surety bond.
Garrett said this bill is based on recommendations of the Small Business Commission.
Garrett explained that the American Rescue Plan Act relief fund for disadvantaged farmers is limited to African Americans and other minority farmers.
Thursday was day 18 of the 2022 Alabama Regular Legislative Session.
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