The bill amends Section 40-18-19 of the Code of Alabama 1975 to introduce a new income tax exemption specifically for members of the Alabama National Guard. It exempts the first $5,000 of taxable income earned from inactive duty training (IDT) from state income tax for the period from January 1, 2027, through December 31, 2029. This new provision is marked by the insertion of language that states, (14) Beginning January 1, 2027 through December 31, 2029, the first five thousand dollars ($5,000) of income received by a member of the Alabama National Guard as payment for inactive duty training (IDT) as described in 37 U.S.C. § 206.. Additionally, the bill makes technical revisions to the existing code, including the deletion of outdated phrases such as as in reference to retirement compensation and following its passage and approval by the regarding effective dates for tax exemptions. Furthermore, the bill HB341 modifies personal exemption allowances for nonresident individual taxpayers in Alabama, ensuring that these taxpayers receive a personal exemption proportionate to their adjusted gross income from Alabama sources. It retains the current personal exemption amounts of $1,500 for single individuals or married individuals not living together, and $3,000 for heads of families or married couples living together. The bill also clarifies that married couples filing separately must each claim the $1,500 exemption and deletes the phrase "of subsection (a)" to streamline language regarding exemptions for dependents. Additionally, it grants the Department of Revenue the authority to implement necessary rules for these provisions, with the act set to take effect on October 1, 2026.

Statutes affected:
Introduced: 40-18-19
Enrolled: 40-18-19