Legislation signed this week by Gov. Kay Ivey changes state tax code so that Alabamians don’t pay higher state income taxes because of family tax credits under the American Rescue Plan Act.
People who already filed their 2021 state tax returns electronically do not have to file amended returns, according to the Alabama Department of Revenue. The department will automatically recompute the federal income tax deduction for eligible individual taxpayers who e-filed prior to the passage of Act 2022-37.
However, taxpayers who filed using My Alabama Taxes or paper returns before the law change need to amend their return to take advantage of this deduction.
Bill sponsor Sen. Dan Roberts, R-Mountain Brook, said very few people filed paper returns and he was glad most people wouldn’t have to file amended returns.
The law change was needed to make the state tax code align with the American Rescue Plan Act’s federal child tax credit, earned income tax credit and federal child and dependent tax credits and reduce the amount of tax due on an Alabama individual income tax return.
For more information from ADOR, visit https://revenue.alabama.gov/arpa-tax-relief/