Alabama has made the following changes to their tax code for the 2025 tax year:
Identity Quiz - If you receive a notice to complete an ID Confirmation Quiz, it is not because you are suspected of identity theft. The purpose of the quiz is to protect your identity and prevent loss of taxpayer dollars to thieves.
Vehicle Loan Interest - Section 40-18-15 provides a deduction for vehicle loan interest paid on new qualified vehicles in 2025 through 2028.
Military Income Exemption - Act 2024-0170 amends Section 40-18-3 to expand the current state income tax exemption on military pay for certain compensation of National Guard and Reserve members who are deployed to locations outside of the United States and/or activated to support certain emergencies.
Sound Money Tax Neutrality Act - Act 2024-0447 amends Section 40-18-14 to exclude net capital gains derived from the exchange of precious metal bullion from state income taxes.
Credits
Alabama Workforce Housing Tax Credit - Act 2024-302 provides an annual credit of up to $2M per project for up to 10 years for a qualified workforce housing project. The Alabama Housing Finance Authority (AHFA) is the determining agency for qualifying projects.
Childcare Facility Tax Credit - Act 2024-303 provides a tax incentive for Alabama childcare providers who own and operate a qualified childcare facility. The incentive is based on the facility's quality rating and average monthly number of eligible children.
Employer Tax Credit - Act 2024-303 provides a tax incentive to Alabama employers who are not childcare providers who support their employees' childcare needs by offering additional assistance for the provision of childcare.
Employer Provider Credit - Act 2024-303 provides a tax incentive to Alabama childcare providers who incur eligible expenses for the operation, maintenance, and/or updates of a qualified childcare facility.
Program Entry:
- State Return
- Click 3 dots and select "Edit"
- Credits