The bill aims to decouple Alabama's income tax regulations from the federal Tax Cuts and Jobs Act (TCJA) concerning the amortization of research and experimental expenditures. Specifically, it allows Alabama taxpayers to deduct these expenditures in the same manner as outlined in 26 U.S.C. § 174 prior to the changes made by the TCJA, which took effect in tax year 2022. The new legal language inserted into the bill specifies that for tax years beginning on or after January 1, 2024, Alabama will not follow the amended provisions of 26 U.S.C. § 174, thus providing taxpayers the option to either currently deduct these expenses or treat them as deferred expenses.

Additionally, the bill grants the Alabama Department of Revenue the authority to adopt rules for the implementation and administration of this act. The act is set to take effect immediately upon passage, ensuring that the changes are applied retroactively to the specified tax years. The bill was passed by the House on February 25, 2025, and subsequently amended and concurred by the Senate on May 6, 2025.