Section 40-18-1 Definitions. For the purpose of this chapter, the following terms shall have the respective meanings ascribed by this section: (1) ADVANCED FOSSIL-BASED GENERATION. The production of electricity from fossil-based generation with the use of technology or efficiency improvements to control or reduce carbon emissions, including but not limited to, technologies described in 26 […]
Section 40-18-1.1 Operating rules. (a) For purposes of this chapter, the statement that gain, loss, income, basis, earnings and profits, or any other item shall be determined in accordance with a specified section or sections of Title 26 United States Code (26 U.S.C.) or a specified federal public law (Pub. L. or P.L.) means that […]
Section 40-18-11 Inventory. Whenever in the opinion of the Department of Revenue the use of inventories is necessary in order clearly to determine the income of any taxpayer, the inventory shall be taken by such taxpayer in accordance with the methods and procedures prescribed in 26 U.S.C. §§263A, 471, 472, 473 and 474. (Acts 1935, […]
Section 40-18-12 Net income of individuals – Defined. Repealed by Act 98–502, § 2. (Acts 1935, No. 194, p. 256; Code 1940, T. 51, §382.)
Section 40-18-13 Computation of income. (a) Income shall be computed on the basis of the same taxable year and in accordance with the same method of accounting that the taxpayer properly employs for federal income tax purposes. If no such method of accounting has been employed or if the method so employed does not clearly […]
Section 40-18-14 Adjusted gross income of individuals. The term “gross income” as used herein: (1) Includes gains, profits and income derived from salaries, wages, or compensation for personal services of whatever kind, or in whatever form paid, including the salaries, income, fees, and other compensation of state, county, and municipal officers and employees, or from […]
Section 40-18-14.1 Deferred compensation plans. Notwithstanding any other laws, all deferred compensation plans for public or private employees authorized in this state shall receive the same tax deferred treatment for state income tax purposes which the plan receives from the Internal Revenue Service for federal income tax purposes in a tax year. Contributions to such […]
Section 40-18-14.2 Adjusted gross income. (a) The term “adjusted gross income,” as used in this section, shall mean the gross income as defined by Section 40-18-14, minus the following deductions: (1) The deductions allowed by this chapter, other than the net operating loss deduction allowed under Section 40-18-15.2, which are attributable to a trade or […]
Section 40-18-14.3 Gross income – Discount and interest. Gross income shall include original issue discount determined in accordance with 26 U.S.C. §§1271 to 1275, inclusive, and interest or other income determined in accordance with 26 U.S.C. §7872, related to certain related party loans, tax avoidance loans, etc. with below-market interest rates. (Acts 98-502, p. 1083, […]
Section 40-18-15 Deductions for individuals generally. THIS SECTION WAS AMENDED BY ACT 2022-297 IN THE 2022 REGULAR SESSION, EFFECTIVE APRIL 11, 2022. THIS IS NOT IN THE CURRENT CODE SUPPLEMENT. (a) No deduction shall be allowed for any losses, expenses, or interest deferred or disallowed pursuant to 26 U.S.C. § 267 or for any cost […]
Section 40-18-15.1 Net income taxable income defined – Generally. For purposes of this chapter, the term “taxable income” or “net income” shall mean “gross income,” as defined in Section 40-18-14, less the deductions allowed to individuals by this chapter. (Act 98-502, p. 1083, §1.)
Section 40-18-15.2 Net operating loss. Individuals may calculate a net operating loss from a trade or business and apply the net operating loss against prior taxable income or future taxable income pursuant to this section. (1) For purposes of this section, the term “net operating loss” means the excess of the deductions allowed by this […]
Section 40-18-15.3 Deductions for health insurance premiums. (a) As used in this section, the following terms shall have the following meanings: (1) QUALIFYING EMPLOYEES. Alabama resident employees who are employed by qualifying employers, earn no more than $50,000 of wages in the applicable tax year, and report no more than $75,000 of adjusted gross income […]
Section 40-18-15.4 Deductions for certain retrofitting or upgrades to homes – Residence in Alabama Insurance Underwriting Association zone. (a) An individual taxpayer, whose legal residence is located in an Alabama Insurance Underwriting Association zone pursuant to Section 27-1-17, shall be allowed a deduction from taxable income, regardless of whether the taxpayer itemizes his or her […]
Section 40-18-15.5 Deductions for certain retrofitting or upgrades to homes – Residence in Alabama. (a) Any individual taxpayer, whose legal residence is located in Alabama, shall be allowed a deduction from taxable income, regardless of whether the taxpayer itemizes his or her income tax deductions, in calculating the income tax imposed pursuant to Section 40-18-5, […]
Section 40-18-15.6 Deductions for contributions made to health savings accounts. (a) For the purposes of this section, health savings account contributions are defined as contributions made by a taxpayer to his or her health savings account up to the maximum amount allowed pursuant to 26 USC §223. (b) Alabama residents will be allowed to deduct […]
Section 40-18-15.7 Optional increased standard deduction for qualified persons. (a) A person qualifying for the optional increased standard deduction is an Alabama resident, single person, or married persons filing a joint return that meet all of the following criteria: (1) Alabama gross income of less than one hundred thousand dollars ($100,000). (2) Zero dollars ($0) […]
Section 40-18-15.8 (Effective until December 31, 2025) Deductions for contributions to qualifying Alabama Achieving a Better Life Experience savings accounts. (a) An individual taxpayer shall be allowed a deduction from gross income, regardless of whether the taxpayer itemizes income tax deductions in calculating the income tax imposed pursuant to Section 40-18-5, for contributions made to […]
Section 40-18-16 Depreciation. (a) Basis for depreciation. The basis upon which exhaustion, wear and tear, depreciation and obsolescence are to be allowed shall be such reasonable allowance as may be determined by the Department of Revenue on the adjusted basis provided in Section 40-18-6 for the purpose of determining the gain or loss upon sale […]
Section 40-18-17 Items not deductible. In computing net income, no deduction shall in any case be allowed in respect of personal, living, or family expense; any amount paid out for new buildings or for permanent improvements or betterment made to increase the value of any property or estate; any amount expended in restoring property or […]
