MONTGOMERY, Ala. – Senator Arthur Orr (R-Decatur) and Representative Lynn Greer (R-Rogersville) today released the following statements on legislation that they introduced to give tax cuts to retirees and low-income individuals. This legislation already has 14 cosponsors in the Senate.
“As a result of the large amount of federal COVID-relief dollars being injected into Alabama and the conservative budgeting approach the legislature has taken over the years, we find ourselves in a prime position to be able to deliver tax cuts to the people back home in our districts – particularly retirees and low-income individuals,” Orr said. “I have been working for some time on these proposals to provide tax cuts to the thousands of Alabamians who really need this relief. The necessity for these cuts is particularly important given our nation’s current out of control inflationary environment – where many with fixed incomes are seeing prices on everyday items skyrocket.”
Orr continued: “The fact is that there are many Alabamians who could greatly benefit from these tax breaks, and we are in a position as a state where we can supply them. I appreciate the broad support that I have already received from my colleagues on this legislation, and I look forward to taking up these bills in the legislative session.”
In the Senate, these bills have been cosponsored by Senators Tom Butler (R-Madison), Gerald Allen (R-Tuscaloosa), Tim Melson (R-Florence), Andrew Jones (R-Cherokee), Jack Williams (R-Mobile), Sam Givhan (R-Huntsville), Jabo Waggoner (R-Vestavia), Clay Scofield (R-Guntersville), Greg Reed (R-Jasper), Tom Whatley (R-Auburn), Will Barfoot (R-Pike Road), Clyde Chambliss (R-Prattville), Chris Elliott (R-Daphne), and Steve Livingston (R-Scottsboro).
“Tax reform on defined contribution plans has been a priority and strong focus of mine for years, and we are now positioned to deliver. All our contiguous states offer a better deal than Alabama to retirees when it comes to defined contribution plan taxation. It is important that we take advantage of the strong budgetary position our state currently finds itself in and use it to do something that will greatly benefit thousands of Alabamians across our state,” Greer said. “My constituents expect that, and I am ready to work hard on moving these bills through the legislature so I can give them this relief. I appreciate Senator Orr’s leadership in recognizing the need for these bills, and I am excited to partner with him in bringing much-needed help to Alabama taxpayers.”
Brief synopses of the legislative proposals filed today:
Senate Bill 18: Currently, distributions from defined contribution deferred compensation plans are treated as taxable income for Alabama income tax purposes. This bill would provide that up to $10,000 of those distributions is exempt from income tax for individuals who are 65 years of age or older. This exemption will be phased in over a two-year period.
Senate Bill 19: Alabama taxpayers are allowed an optional standard deduction, as well as dependent exemptions in computing income subject to the tax. This bill would increase the optional standard deduction by the following amounts:
• Married filing jointly - $1,000
• Single, Married Filing Separate, and Head of Household - $500
The bill would also increase the adjusted gross income range allowable for the maximum optional standard deduction to $35,000 (from $33,000) and the adjusted gross income range allowable for dependent exemption to $50,000 (from $20,000) to increase the threshold at which the state imposes individual income taxes.