The bill amends Section 40-18-3 of the Code of Alabama 1975 to expand the state income tax exemption for military pay. Specifically, it includes compensation for members of the National Guard and Reserve, as well as those who are deployed outside the United States or activated to support emergencies. The new legal language inserted into the current law clarifies that income from active service as a member of the armed forces, including those in the National Guard and Reserve, will not be subject to Alabama state income taxes if they are serving in a combat zone, deployed outside the U.S., or activated for emergency response.

Additionally, the bill removes the previous stipulation that the tax exemption applied only for the calendar year 1965 and any subsequent years. This change broadens the scope of the exemption, ensuring that qualifying military personnel are not taxed on their compensation regardless of the year. The act is set to take effect on January 1, 2025.

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