The bill presented is an act to amend Section 40-18-3 of the Code of Alabama 1975, concerning the state income tax exemption for military pay. The amendment seeks to expand the exemption to include certain compensation received by members of the National Guard and Reserve components. Additionally, the exemption will cover those members who are deployed to locations outside the United States or activated to support state or federal response to emergencies, whether within or outside of the United States.

The bill specifies that the income paid by the United States to individuals as compensation for active service in the armed forces, including the National Guard and Reserve components, under the specified conditions, shall not be subject to state income taxes in Alabama. The bill removes the previous time restriction that applied to the calendar year 1965 and subsequent years, thereby updating the exemption to be applicable from January 1, 2025, onwards. The bill has passed both the Senate and the House of Representatives as of April 23, 2024.

Statutes affected:
Introduced: 40-18-3, 40-18-3
Enrolled: 40-18-3, 40-18-3