(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 an Alabama Achieving a Better Life Experience (ABLE) savings account, defined in Section 16-33C-3, as prescribed by this section.
(b) An individual taxpayer will be allowed to deduct contributions made on or after January 1, 2021 to an Alabama ABLE savings account, by or on behalf of such individual, of an amount up to five thousand dollars ($5,000) per annum. If the taxpayer makes a nonqualified withdrawal as defined by Section 529A of the Internal Revenue Code (26 U.S.C. 529A), the amount of the nonqualified withdrawal, plus 10 percent of the amount withdrawn, shall be added back to the income of the contributing taxpayer in the year the nonqualified withdrawal was distributed. Rollover amounts transferred to an Alabama ABLE savings account shall not be considered contributions for purposes of this deduction to the extent that an Alabama income tax deduction has already been claimed for the rollover contribution amounts.
(c) The Department of Revenue may adopt rules to assist with the administration of this section.
(d) Unless extended by an act of the Legislature, this section shall sunset on December 31, 2025.
Structure Code of Alabama
Title 40 - Revenue and Taxation.
Article 1 - General Provisions.
Section 40-18-1 - Definitions.
Section 40-18-1.1 - Operating Rules.
Section 40-18-2 - Levied; Persons and Subjects Taxable Generally.
Section 40-18-2.1 - Income of Foreign Missionary Exempt.
Section 40-18-3 - Income of Officers or Agents of the United States, Etc.
Section 40-18-5 - Tax on Individuals.
Section 40-18-6 - Gain or Loss - Basis of Property; Adjusted Basis.
Section 40-18-6.1 - Gain or Loss — Special Rules for Capital Gains Invested in Opportunity Zones.
Section 40-18-7 - Gain or Loss - Determination of Amount.
Section 40-18-8 - Gain or Loss - Recognition.
Section 40-18-8.1 - Gain or Loss — Recognition of Gains Invested in Opportunity Zones.
Section 40-18-12 - Net Income of Individuals - Defined.
Section 40-18-13 - Computation of Income.
Section 40-18-14 - Adjusted Gross Income of Individuals.
Section 40-18-14.1 - Deferred Compensation Plans.
Section 40-18-14.2 - Adjusted Gross Income.
Section 40-18-14.3 - Gross Income - Discount and Interest.
Section 40-18-15 - Deductions for Individuals Generally.
Section 40-18-15.1 - Net Income Taxable Income Defined - Generally.
Section 40-18-15.2 - Net Operating Loss.
Section 40-18-15.3 - Deductions for Health Insurance Premiums.
Section 40-18-15.6 - Deductions for Contributions Made to Health Savings Accounts.
Section 40-18-15.7 - Optional Increased Standard Deduction for Qualified Persons.
Section 40-18-16 - Depreciation.
Section 40-18-17 - Items Not Deductible.
Section 40-18-18 - Amortization of War or Emergency Facilities.
Section 40-18-19 - Exemptions - Generally.
Section 40-18-19.1 - Exemptions for Severance, Unemployment Compensation, Etc.
Section 40-18-20 - Exemptions - Military Retirement Benefits.
Section 40-18-21.1 - Annual Report of Credits Claimed for Taxes Paid to Foreign Countries.
Section 40-18-24 - Taxation of Subchapter K Entity.
Section 40-18-24.1 - Composite Return and Payment by Nonresident Owner of Subchapter K Entity.
Section 40-18-24.2 - Taxation of Pass-Through Entities.
Section 40-18-24.4 - Alabama Electing Pass — Through Entity Tax Act.
Section 40-18-25 - Estates and Trusts.
Section 40-18-25.1 - Estates and Trusts - Exemptions.
Section 40-18-25.2 - Estates and Trusts - Deductions From Gross Income of Net Operating Loss.
Section 40-18-26 - Information From Source of Income.
Section 40-18-27 - Individual Taxpayer's Returns; Liability of Innocent Spouse.
Section 40-18-28 - Returns of Subchapter K Entities and Single Member Limited Liability Companies.
Section 40-18-29 - Fiduciary Returns.
Section 40-18-30 - Return When Accounting Period Changes.
Section 40-18-31 - Corporate Income Tax - Generally.
Section 40-18-31.2 - Factor Presence Nexus Standard for Business Activity.
Section 40-18-32 - Corporate Income Tax - Exemptions.
Section 40-18-33 - Corporate Income Tax - Taxable Income.
Section 40-18-34 - Additions Required by Corporations.
Section 40-18-35 - Deductions Allowed to Corporations.
Section 40-18-35.1 - Carry Forward of Net Operating Losses.
Section 40-18-36 - Distributions by Corporations.
Section 40-18-37 - Items Not Deductible by Corporations.
Section 40-18-38 - Additional Deductions Allowed for Corporations; Credits.
Section 40-18-39 - Corporate Returns.
Section 40-18-39.1 - Business Interest Expense Deduction Limitations.
Section 40-18-41 - Amortization of Ad Valorem Tax.
Section 40-18-42 - Time and Methods of Payment of Tax.
Section 40-18-44 - Installment Method.
Section 40-18-50 - Penalty for Failure to Make Return Within Time Specified.
Section 40-18-53 - Inspection of Returns by Federal or Foreign State Agents.
Section 40-18-54 - Supervision of Assessment and Collection.
Section 40-18-55 - Statement to Be Furnished by Taxpayer.
Section 40-18-57 - Rules to Be Promulgated by Department of Revenue.
Section 40-18-58 - Appropriation.
Section 40-18-59 - Additional Appropriations.
Section 40-18-60 - Covid-19 Recovery Capital Credit Protection Act of 2021.