MONTGOMERY, Ala. – The State Senate today unanimously passed legislation sponsored by Senator Arthur Orr (R-Decatur) that would provide tax cuts for low-income Alabamians and some retirees. The bill – SB19 – has an estimated annual reduction of $17.23 million.
“We are in a very good place with our state budgets – the best since the recession hit in 2007. Because of the legislature’s fiscally conservative and responsible budgeting approach over the past decade and with the recent federal pandemic relief dollars flowing into the state, there is real potential to provide these important tax cuts that otherwise we would not be able to propose,” said Orr.
Under current law, the state levies an income tax upon all residents and nonresidents who receive income from Alabama sources. Taxpayers are allowed an optional standard deduction, as well as dependent exemptions in computing income subject to the tax.
This bill would increase the optional standard deduction for married filing jointly taxpayers by $1,000 and for taxpayers who file married filing separate, single, and head of family by $500. It would also increase the adjusted gross income range allowable for the maximum optional standard deduction to $35,000 (from $33,000) and the adjusted gross income range allowable for dependent exemption to $50,000 (from $20,000) to increase the threshold at which the state imposes individual income taxes.
“Inflation is at a nearly 40-year high, and the rising prices make it difficult for several struggling families to afford groceries, gas, and necessities. While individuals are spending more money on these everyday items, the state is directly benefitting from it. It’s critical that lawmakers make a significant effort to support Alabamians when we have the means to do so,” Orr continued. “I appreciate the support from my colleagues on this effort, and I look forward to this bill’s passage in the House so that we can send money back to hardworking Alabamians.”
SB19 received bipartisan support in the Senate and will now move to the House of Representatives for consideration. The companion bill in the House is sponsored by Representative Lynn Greer (R-Rogersville).