AlabamaAlabama would allow overtime deductions and pause food taxes
Alabama individual taxpayers would receive an overtime deduction, while the state tax on food would be suspended for two months in 2026.
What it does
Individual taxpayers would be able to deduct qualified overtime pay up to $1,000, whether they itemize deductions or use the standard deduction.
The state portion of sales and use taxes on food would be paused from May 1 through June 30, 2026; local taxes are not covered.
Argument forWorkers who receive overtime may pay less Alabama income tax because the measure would exclude up to $1,000 of overtime pay.
Argument againstThe food-tax pause lasts only two months, so shoppers and retailers may face a return to the state tax afterward.
More detail
Individual taxpayers would be allowed to deduct qualified overtime compensation from Alabama taxable income. The deduction covers qualified overtime compensation calculated under 26 U.S.C. § 225 and applies to Alabama individual income taxpayers. The deduction is limited to $1,000 per taxpayer. Taxpayers may claim it whether they itemize deductions or use the optional standard deduction. The provision applies to tax years beginning on or after January 1, 2026, and ending December 31, 2028; Section 1 is stated to become effective October 1, 2026.
The state portion of Alabama sales and use taxes on food would be suspended. The suspension covers the state tax portion on food and does not state that local tax portions are suspended. The Department of Revenue may adopt rules to carry out the suspension. The suspension would run from May 1 through June 30, 2026, and Section 2 is stated to become effective immediately.
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Where it stands
- Introduced
- Passed House
- Passed Senate
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- Apr 17EnactedBecame Law
- Apr 8Third Reading in Second House
- Vote recorded Third Reading in Second House. Result: pass.Upper
- Vote recorded Motion to Read a Third Time and Pass - Adopted Roll Call 1244. Result: pass.Upper
- Apr 8Motion to Read a Third Time and Pass - Adopted Roll Call 1244Passed Senate
- Apr 8Ready to Enroll
- Apr 8EnrolledTo Governor
- Apr 8Signature Requested
- Apr 8Delivered to GovernorMinor
- Apr 7Reported Out of Committee Second House
- Apr 7Read for the Second Time and placed on the Calendar (Finance and Taxation Education)Minor
- Mar 31Third Reading in House of Origin
- Vote recorded Lomax motion to Table - Adopted Roll Call 1061. Result: pass.Lower
- Vote recorded Lomax motion to Table - Adopted Roll Call 1062. Result: pass.Lower
- Vote recorded Third Reading in House of Origin. Result: pass.Lower
- Vote recorded Motion to Adopt - Adopted Roll Call 1060. Result: pass.Lower
- Vote recorded Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 1064. Result: pass.Lower
- Vote recorded Motion to Adopt - Adopted Roll Call 1063. Result: pass.Lower
- Mar 31Ways and Means Education Engrossed Substitute Offered (Ways and Means Education)Minor
- Mar 31Motion to Adopt - Adopted Roll Call 1060Major
- Mar 31Lands 1st Amendment OfferedMinor
- Mar 31Lomax motion to Table - Adopted Roll Call 1061Major
- Mar 31Lands 2nd Amendment OfferedMinor
- Mar 31Lomax motion to Table - Adopted Roll Call 1062Major
- Mar 31Shaw 1st Amendment OfferedMinor
- Mar 31Motion to Adopt - Adopted Roll Call 1063Major
- Mar 31Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 1064Passed House
- Mar 31Engrossed
- Mar 31Read for the first time and referred to the Senate Committee on Finance and Taxation EducationMinor
- Mar 31Pending Committee Action in Second House (Finance and Taxation Education)
- Mar 19Read for the Second Time and placed on the Calendar (Ways and Means Education)Minor
- Mar 18Reported Out of Committee House of Origin (Ways and Means Education)
- Feb 26Read for the first time and referred to the House Committee on Ways and Means EducationMinor
- Feb 26Pending Committee Action in House of Origin (Ways and Means Education)Introduced
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