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Last updated 5:08AM ET
February 27, 2021
Legislature Approves Tax Breaks for Individuals, Business
(APR - Alabama Public Radio ) - The Alabama Legislature wrapped up its special session Saturday by approving tax breaks for individuals and small businesses.

The Senate give final approval to a bill that will make sure Alabamians don't have to pay state income taxes on their federal economic stimulus checks. That will save $30 in taxes on a $600 stimulus check for an individual and $60 on a $1,200 stimulus check for a couple.

The Senate also give final approval to a bill that will allow businesses with less than 25 employees to deduct from their state income tax 150 percent of what they spend on employees' health insurance. Workers at small businesses would get the same deduction for their payments toward health insurance. The deduction has been 100 percent.

The tax break applies to workers who make $50,000 or less annually or have an adjusted gross income of $75,000 or less.

Tara Hutchison, press secretary for Gov. Bob Riley, said he will sign both bills into law.

"No one was pleased that there had to be a special session, but everyone can be pleased the special session was finished in the shortest amount of time possible," Riley said in a statement while on a 10-day trade trip to South America.

The Legislature wrapped up its special session in five days, the quickest time possible for passing bills.

"We had an outstanding special session and did it in record time," Senate Rules Committee Chairman Lowell Barron, D-Fyffe, said.

Proponents of the health insurance legislation said it would encourage more small businesses to offer health insurance and would encourage more employees to sign up for plans where they have to pay part of the cost. In the long run, proponents hope it will result in more Alabamians having health insurance.

"Any time you can find incentives both for employers and employees, it can only have positive results," said William Canary, president of the Business Council of Alabama.

Canary said the legislation, which passes 32-0, will affect the bulk of the businesses in the state.

To pay for the $33 million annual tax break, the Republican governor recommended and the Democrat-controlled Legislature passed a bill to close some loopholes that large national corporations use to pay less state income taxes in Alabama.

That bill, designed to raise $54 million annually, reins in the practice of national corporations paying a sister company huge amounts for use of a trademark and then using those payments to lower their state taxes on income made in Alabama.

The other bill exempting economic stimulus checks from the state income taxes passed 28-0 and will save Alabama citizens $57 million in tax payments.

The federal economic stimulus package also included an accelerated depreciation schedule for equipment purchases by businesses.

Alabama's depreciation schedule has been tied to the federal schedule for years, which means the federal legislation would have accelerated the state depreciation schedule. But the Legislature uncoupled the two in the bill. That means businesses in Alabama won't get $59 million in state tax breaks they would have received otherwise.

Sen. Parker Griffith, who guided the bill through the Senate, said the state could afford both tax breaks, and exempting the stimulus checks would help more people.

Some Republicans tried to rewrite the bill to let businesses keep the accelerated depreciation schedule, but they lost by two votes.

"The liberal policy of the past giving the consumers a tax break but not helping the family-owned businesses is not the way to go," Sen. Scott Beason, R-Gardendale, said.

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