The bill amends Section 40-18-2 of the Code of Alabama 1975 to clarify the individuals subject to income tax, specifically excluding certain nonresidents from taxation. The amendments include the insertion of "the State of" Alabama in various sections to specify the jurisdiction for tax liability. Additionally, it introduces a new Section 40-18-2.2, which exempts certain nonresident income from income tax under specific conditions. These conditions include nonresidents performing employment duties in Alabama for 30 days or fewer in a calendar year, not being professional athletes, entertainers, or public figures, and their state of residence providing a similar tax exclusion.

Furthermore, the bill outlines that employers are not required to withhold taxes from qualifying nonresident employees, and it provides guidelines for tracking employee work locations through a time and attendance system. It also states that there will be no penalties for employers who fail to withhold taxes if they meet certain conditions regarding their record-keeping practices. The provisions of this bill will take effect for tax years beginning on or after January 1, 2026, and the act itself will become effective on October 1, 2025.

Statutes affected:
Introduced: 40-18-2, 40-18-2
Engrossed: 40-18-2, 40-18-2
Enrolled: 40-18-2, 40-18-2