By MARY SELL, Alabama Daily News
Lawmakers are now one vote away from ensuring Alabama families aren’t penalized on the state income taxes because of last year’s expanded tax credits under the American Rescue Plan Act.
A change to state tax code was needed to ensure taxpayers received the full benefit of the federal COVID-19 relief. Under current law, the expanded child tax credit and other special tax credits extended by Congress last year are considered taxable income by the state. Similar legislation was needed previously to untax businesses’ CARES Act benefits.
House Bill 231 by Rep. Jim Carns, R-Vestavia Hills, was approved in the Senate education budget committee on Wednesday.
“They gave us a lot of money for the American Rescue Plan Act that was supposed to be tax free,” Carns said on the House floor Tuesday when the bill passed that chamber.
A Senate version by Sen. Dan Roberts, R-Mountain Brook, was approved in that chamber earlier last week. Some lawmakers have expressed frustration over the time it’s taking to get final passage of this bill, given that Alabamians are filing their taxes now.
If the legislation didn’t get approved, Alabamians would pay an extra $87 million in state income taxes, supporters have said.
People who have already filed their taxes would need to file an amendment in order to get a refund.