The bill amends Section 40-18-2 of the Code of Alabama 1975 to clarify the individuals subject to income tax in Alabama, specifically excluding certain nonresidents from taxation. The amendments include the insertion of "the State of" before "Alabama" in multiple instances, and it specifies that nonresident individuals receiving income from property or business transacted in Alabama are taxable, except as provided 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 certain conditions, such as not being a professional athlete, entertainer, or public figure.

Additionally, the bill outlines that employers are not required to withhold taxes from the compensation of nonresidents who meet the specified criteria. It also includes provisions for temporary exemptions for nonresidents performing disaster-related work and establishes guidelines for tracking employee work locations for tax purposes. The bill is set to take effect on October 1, 2025, with the provisions of Section 40-18-2.2 effective for tax years beginning on or after January 1, 2026.

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