HB3 Alabama 2022 1st Special Session

Under existing law, amounts received as federal child tax credits under Internal Revenue Code Section 24, as federal earned income tax credits under Internal Revenue Code Section 32, or as child and dependent care tax credits under Internal Revenue Code Section 21 reduce the federal income tax deduction allowed for Alabama individual taxpayers

Under existing law, the enhanced, federal expansion of these credits under the American Rescue Plan Act, which will be granted to individual taxpayers in the tax year ending December 31, 2021, would increase Alabama individual taxable income for the 2021 tax year

This bill would create an allotment in the state income tax law to conform with the federal intent behind the income tax credit expansion within the American Rescue Plan Act and would provide that the reduction in the individual federal income tax deduction associated with the federal child tax credits, earned income tax credits, and child and dependent care tax credits for the tax year ending on December 31, 2021, would be calculated as if the individual paid the federal income tax that would otherwise have been paid under the provisions of the Internal Revenue Code in effect on December 31, 2020

Under current law, the due date for a corporate income tax return and financial institution excise tax return is the same as the corresponding federal income tax return

This bill would provide for a one-month extension of the due date of tax returns for Alabama financial institution excise taxpayers and corporate income taxpayers in tax years beginning on or after January 1, 2021, in order to provide taxpayers with additional time to calculate their tax liabilities under new federal and state tax law, without incurring a late filing penalty. The filing extension would not extend the due date of the tax liability by these taxpayers

This bill would also authorize the Department of Revenue, in its discretion, to extend the due date of tax returns for Alabama financial institution excise taxpayers and corporate income taxpayers by one month in tax years beginning on or after January 1, 2020, but before January 1, 2021

Relating to taxation; to provide that the deduction allowed to individual taxpayers for federal income tax paid or accrued within the tax year ending December 31, 2021 will be determined without considering the reduction in federal tax attributable to any additional federal child tax credit, federal earned income tax credit, or federal child and dependent care tax credit received pursuant to the American Rescue Plan Act of 2021, in order to allow individuals to receive the amount of the enhanced federal credits rather than pay state income tax on a portion of the amounts received; to add Sections 40-16-3.1 and 40-18-39.2 to the Code of Alabama 1975, to provide for an extension of the due date for tax returns for certain taxpayers; and to authorize the Department of Revenue to adopt rules.