Alabama One-Time Income Tax Credit

Alabama passes a one-time, refundable income tax credit for qualified individual taxpayers.

Effective June 1, 2023, Act 377 of 2023 (S86) provides qualified Alabama individual taxpayers with a one-time, refundable income tax credit. The credit amount is determined based on the taxpayer’s filing status for the 2021 tax year.

Here are the specific amounts:

  1. Single, head of family, and married filing separately: $150
  2. Married filing jointly: $300

To be considered a “qualified taxpayer,” an individual must have filed an Alabama individual income tax return for the 2021 tax year by October 17, 2022, including any extensions. However, nonresidents, estates or trusts, and individuals claimed as dependents by another taxpayer for federal or Alabama income tax purposes in 2021 are not considered qualified taxpayers.

Starting from November 30, 2023, the refundable income tax credit will be electronically deposited into the bank account provided by the qualified taxpayer on their 2021 return. The credit will be mailed as a check if the Department of Revenue does not have the taxpayer’s bank account information.

Importantly, this credit will not be treated as taxable income for Alabama income tax purposes. It is also not subject to offset or debt collection against any liability.

If you have questions about this act, please contact us here.