And down the stretch they come

With the 2025 Legislative Derby three days from its end, the finish line is in sight for legislators jockeying to get priority bills passed (and opposing bills blocked).  We’ve been told the plan is for two session days this week (Tuesday and Wednesday) and one final session day the following Wednesday.  If all goes well, we will finally have some resolutions on bills of interest to CPAs this week.  At this point in the session, it is difficult to predict if all will go well.

 

We’ve shortened our watchlist based on bills that have at least a chance of passing.

 

Details on the status of our priority bills:

1. Rep. David Faulkner’s HB163 (HB163-int.pdf) – No new update this week. The Finance & Taxation-Education Committee gave this bill a favorable report last week. The Senate could hear and vote on this bill as soon as Tuesday. Due to a technical amendment approved by the Senate Committee, the House would have to concur with the amendment. We continue to advocate for, and remain optimistic about, this bill, which allows immediate expensing of R&D expenditures for state tax purposes.

 

2. Sen. Clyde Chambliss’s SB174 (SB174-int.pdf) – This bill has PASSED the legislature and now awaits Governor Ivey’s signature.

Currently, unfair business license taxes require taxpayers to appeal to the circuit court in the jurisdiction of the taxing agency. The ability to file these appeals with the Alabama Tax Tribunal saves taxpayers time and money. We are pleased with the passage of this bill.

 

3. Rep. Danny Garrett’s HB379 (HB379-int.pdf) – Creates conditions under which a non-resident employee working temporarily in Alabama can be exempt from withholding and paying Alabama income tax.

Chairman Arthur Orr moved this bill through the Senate’s Finance & Taxation – Education Committee with a favorable report. Along with Manufacture Alabama and BCA, we will continue to work with Senate leadership to get this bill moved onto the Senate Floor.

 

4. Rep. Terri Collins’s HB365 (HB365-eng.pdf) – No new update this week. The bill creates the Alabama STEM Council within the Department of Workforce to advise State Government on ways to improve STEM-related education, awareness and workforce development.

Thanks to Rep. Collins’ help, the bill has been amended to include “accounting” as a STEM-related career. The amended bill has passed the second chamber’s committee and we await the full Senate’s consideration. Once passed, the House would have to concur with that amendment.

 

5. Chairman Garrett’s HB386-389 (HB386-int.pdf, HB387-int.pdf, HB388-int.pdf, HB389-int.pdf) – This series of bills would make permanent tax-reductions to grocery sales taxes, increases the optional standard deduction for income taxes, and increases the tax exemption for taxable retirement income. Prior to receiving favorable reports from the Senate’s Finance Taxation – Education Committee, these bills received some remodeling.

• HB386 now combines the sales tax reduction provisions in the original HB386 and HB387.
• HB387 was substituted for a bill that would lower the “machine & equipment” sales tax rate from 1.5% to 1.25%.
• HB388 was originally set to increase the state’s exemption for taxable retirement benefits from $6,000 to $12,000 as of January 1, 2026. This Committee amendment will phase in the increase over three years. As amended, the exempted amount will be $8,000 in 2026, $10,000 in 2027 and $12,000 in 2028.

 

6. Rep. Chris Sells’ HB505 (HB505-int.pdf) – This bill would increase the amount of time a taxpayer may appeal a final assessment to the Alabama Tax Tribunal or circuit court from 30 days to 60 days. It also provides pay scale adjustments for Tax Tribunal judges.

This bill awaits Senate Floor approval. We support this bill and are optimistic about its passage.

CLICK HERE FOR THE WATCHLIST

There have been 967 bills filed as of this weekend. The bills in their entirety can be found at https://alison.legislature.state.al.us and if you have any additional questions or comments, please reach out to me at rpearson@alabama.cpa.