SB5 By Senator Chesteen RFD Finance and Taxation Education Rd 1 04-FEB-20

SYNOPSIS: Under existing law, Alabama taxpayers not currently residing in the state, and who serve as active duty members of the United States Army, United States Navy, United States Air Force, United States Marine Corps, or United States Coast Guard, or who serve in any of the reserve components of the United States Armed Forces, or who serve in the Alabama Army National Guard or Alabama Air National Guard, do not have an option for deducting military pay and allowances on Alabama individual income tax returns while stationed outside of the State of Alabama.

This bill would grant a state income tax deduction for military pay and allowances to Alabama taxpayers not currently residing in the state, and who serve as active duty members of the United States Army, United States Navy, United States Air Force, United States Marine Corps, or United States Coast Guard, or who serve in any of the reserve components of the United States Armed Forces, or who serve in the Alabama Army National Guard or Alabama Air National Guard.

This bill also would require military service members claiming deductions for military pay and allowances to annually certify current residence status to the Alabama Department of Revenue.

This bill would also require the Alabama Department of Revenue to adopt rules for implementation and enforcement of the bill.

A BILL TO BE ENTITLED AN ACT

Relating to military service members; to provide for a state income tax deduction for military pay and allowances for Alabama taxpayers serving as active duty members of the United States Army, United States Navy, United States Air Force, United States Marine Corps, or United States Coast Guard, or serving in any of the reserve components of the United States Armed Forces, or serving in the Alabama Army National Guard or Alabama Air National Guard, while stationed outside the state; to require military service members claiming deductions for military pay and allowances to annually certify current residence status to the Alabama Department of Revenue; and to require the Department of Revenue to adopt rules to implement and enforce the provision of the deduction.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. (a) An Alabama taxpayer not currently residing in the state, and who serves as an active duty member of the United States Army, United States Navy, United States Air Force, United States Marine Corps, or United States Coast Guard, or who serves in any of the reserve components of the United States Armed Forces, or who serves in the Alabama Army National Guard or Alabama Air National Guard, may claim a deduction on his or her Alabama income tax return for military pay and allowances received during the taxable year which are not otherwise deductible or excludable from adjusted gross income for state income tax purposes for the taxable year. The deduction may not be claimed for military pay and allowances received by the taxpayer while the taxpayer is stationed in this state.

(b) The taxpayer shall certify annually his or her residence status, on forms provided by the Alabama Department of Revenue, in order to claim the deduction provided for in this section.

Section 2. The Department of Revenue shall adopt rules to implement and enforce this act.

Section 3. This act shall become effective for the taxable years beginning after December 31, 2020, following its passage and approval by the Governor, or its otherwise becoming law.

Revenue Department

Income Tax

Military

Residence

Taxation