AlabamaAlabama would exclude employer-paid education loans and Trump Accounts from income
For tax years beginning on or after January 1, 2026, Alabama would not count certain employer-paid education loans or Trump Account contributions as employee income.
What it does
Employer-paid principal or interest on qualifying education loans would not count as Alabama gross income when the payment also qualifies for the federal exclusion.
Employer contributions to an employee’s or dependent’s qualifying Trump Account would not count as Alabama gross income if they also qualify for the federal exclusion.
Argument forEmployees may owe less Alabama income tax when employers pay qualifying education loans or fund qualifying Trump Accounts.
Argument againstEmployees receive this treatment only for employer payments that meet the federal exclusions, so other education or account contributions may not qualify.
More detail
Alabama would exclude certain employer-paid qualified education loan payments from an employee’s gross income. The exclusion covers principal or interest paid by an employer to the employee or the employee’s lender. The payment must qualify for exclusion from the employee’s federal gross income under the cited federal law. The exclusion applies to tax years beginning on or after January 1, 2026, and the act states that it becomes effective May 1, 2026.
Alabama would exclude certain employer contributions to an employee’s or dependent’s Trump Account from the employee’s gross income. The provision covers contributions made by an employer to a Trump Account belonging to the employee or the employee’s dependent. The contribution must qualify for exclusion from the employee’s federal gross income under the cited federal law. The exclusion applies to tax years beginning on or after January 1, 2026, and the act states that it becomes effective May 1, 2026.
Where do you stand?
Choose your position
Tell your reps
Take a position to see your representatives and ways to contact them.
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 8Signature Requested
- Apr 8Delivered to GovernorTo Governor
- Apr 7Third 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 1219. Result: pass.Upper
- Apr 7Motion to Read a Third Time and Pass - Adopted Roll Call 1219Passed Senate
- Apr 7Ready to Enroll
- Apr 7Enrolled
- Feb 25Reported Out of Committee Second House
- Feb 25Read for the Second Time and placed on the Calendar (Finance and Taxation Education)Minor
- Feb 12Third Reading in House of Origin
- Vote recorded Motion to Read a Third Time and Pass - Adopted Roll Call 395. Result: pass.Lower
- Vote recorded Third Reading in House of Origin. Result: pass.Lower
- Feb 12Motion to Read a Third Time and Pass - Adopted Roll Call 395Passed House
- Feb 12Read for the first time and referred to the Senate Committee on Finance and Taxation EducationMinor
- Feb 12Pending Committee Action in Second House (Finance and Taxation Education)
- Jan 29Read for the Second Time and placed on the Calendar (Ways and Means Education)Minor
- Jan 28Reported Out of Committee House of Origin
- Jan 15Read for the first time and referred to the House Committee on Ways and Means EducationMinor
- Jan 15Pending Committee Action in House of Origin (Ways and Means Education)Introduced
Taxes & BudgetEconomy & JobsEducation