The bill amends Section 40-18-2 of the Code of Alabama 1975 to clarify the individuals subject to income tax, specifically by excluding certain nonresidents from taxation. The amendments include the insertion of "the State of" before Alabama in multiple instances, and it establishes that nonresident individuals receiving income from property or business transacted in Alabama are taxable, except as outlined in the newly added Section 40-18-2.2. This section introduces exemptions for nonresident individuals, particularly those who perform employment duties in Alabama for 30 days or fewer in a calendar year, provided they meet specific conditions, such as not being a professional athlete, entertainer, or public figure.

Additionally, the bill stipulates that employers are not required to withhold taxes from the compensation of nonresidents who meet the exemption criteria. It also includes provisions for temporary nonresidents performing disaster-related work, ensuring their compensation is exempt from state and local taxes. The bill mandates the Alabama Department of Revenue to adopt necessary rules for its administration and specifies that the provisions will take effect for tax years beginning on or after January 1, 2026, with the overall act becoming 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