The bill HB527 amends Section 40-18-15 of the Code of Alabama 1975 to introduce a new individual income tax deduction for qualified overtime compensation, allowing taxpayers to deduct up to $1,000 of such compensation received during the taxable year. It also modifies existing tax provisions, including reducing the threshold for deducting medical and dental expenses from 7.5% to 4% of adjusted gross income and increasing the deduction limit for expenses related to removing architectural barriers for handicapped persons from $30,000 to $35,000. Additionally, the bill includes technical revisions to modernize the language of the law.

Moreover, the bill establishes new standard deduction amounts for various taxpayer categories, effective for tax years beginning after December 31, 2021. It sets a minimum standard deduction of $2,500 for single taxpayers and $5,000 for married taxpayers filing jointly, with specific income thresholds and reduction formulas based on adjusted gross income. The bill also temporarily suspends the state portion of sales and use taxes on food from May 1, 2026, to June 30, 2026, and grants the Department of Revenue authority to implement related rules. Overall, HB527 aims to provide tax relief through new deductions and revised standard deduction calculations while streamlining existing provisions and clarifying conditions for claiming deductions.

Statutes affected:
Introduced: 40-18-15, 40-18-15
Engrossed: 40-18-15, 40-18-15
Enrolled: 40-18-15, 40-18-15