MONTGOMERY – The Alabama Senate on Wednesday finally passed bills to prevent federal taxation of aid and revise incentives for the state’s economic development, sending the first two of three priority bills to Governor Kay Ivey for signature.
Senate Bill 30, the third bill given priority by House and Senate leadership, would provide limited protection against COVID-19-related lawsuits to corporations and other businesses. This bill by Senator Arthur Orr, R-Decatur, was approved in the House Judiciary Committee on Wednesday.
House Bill 170, sponsored by Rep. Danny Garrett, R-Trussville, and Senator Dan Roberts, R-Birmingham, makes it clear that Alabama individuals, corporations, and nonprofits are not required to pay state income taxes on federal funds received from Congressional COVID received -19 aid packages. The law was passed unanimously by the Senate.
“We are not going to tax any of the stimulus funds that have been received for companies, individuals or anyone,” said Roberts. “That’s at least $ 8.7 billion that has come into our state and is not taxed. These funds will do exactly what they intended – to benefit our state. “
House Bill 192, sponsored by Rep. Bill Poole, R-Tuscaloosa, and Senator Greg Reed, R-Jasper, approves and renews the state’s economic development incentives. It was also passed unanimously by the Senate.
Both proposals come from unfinished business remnants of the 2020 legislative period, which was shortened with coronaviruses. But instead of updating relatively simple bills, the sponsors went even further and made more substantial changes.
In terms of economic development, House Bill 192 increases the annual caps on the Alabama Jobs Credit and its sister investment credit by $ 25 million in 2021 and 2022, from $ 300 million to ultimately $ 350 million. It also raises the cap on the growing Alabama loan that local authorities can use to build and improve industrial parks from $ 10 million to $ 20 million.
The bill also offers tax breaks for automakers who will ship vehicles out of the port of Mobile. This is timely as the Alabama Port Authority is building a $ 60 million auto terminal that vehicles can use to roll on and off ships. It also creates new incentives for women and black-owned companies.
“These economic development incentives, refreshed and sharpened, have proven to be essential tools in our toolbox when it comes to recruiting and growing the industry across Alabama,” said Poole as the law passed.
On taxes, Roberts’ and Garrett’s bill includes reforms to corporate tax law that have long been sought but never achieved by tax lawyers.
The bill would change the distribution of business income in Alabama, clarify the corporate deduction for business interest expenses, and make changes to the taxation of certain income from international affiliates and some government grants and incentives for economic development.
It also ensures that interest deductions for Alabama-based businesses are consistent with intended federal deductions.
One of the more significant provisions removes Alabama’s “fallback” rule on corporate income-sharing, according to which if an Alabama-based company makes sales in another state but is not taxed by that other state, those sales are “set back”. and included in Alabama distributed income.
Roberts said nearly half of the states, including most of the states around Alabama, have already lifted their relapse rules.
“Our Alabama businesses were competitive,” said Roberts. “This legislation enables Alabama companies to compete on the same level.”
The bill would also allow pass-through companies, which include the majority of Alabama companies, to be taxed at the corporate level for state purposes when it is best for them to do so. Pass-through businesses are not subject to corporate income tax, but their profits go to owners or members and are taxed under individual income tax.
Both invoices are expected to be signed by Ivey today.
Two Democrats on the House of Representatives Judiciary Committee, Rep. Chris England, D-Tuscaloosa, and Rep. Merika Coleman, D-Birmingham, voted no to Orr’s bill related to COVID-19 lawsuits. The bill could get a final vote in parliament this morning so Ivey can sign all three priority bills this afternoon.