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HB 389

Income tax, optional standard deduction increased, adjusted gross income range allowed for maximum dependent exemption increased

2025 Regular Session Introduced by Danny Garrett

Alabama increases the standard deduction and expands dependent exemption eligibility to higher-income earners, providing tax relief with unspecified state revenue costs.

Read for the Second Time and placed on the Calendar (Finance and Taxation Education)
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Bill Summary · HB 389

Legislative bill overview

HB 389 increases Alabama's optional standard deduction and expands the adjusted gross income (AGI) range at which taxpayers can claim the maximum dependent exemption. This bill modifies two key parameters in Alabama's state income tax code to provide tax relief to certain filers.

Why is this important

These changes directly affect how much income Alabamians can deduct before calculating state income tax liability and who qualifies for dependent exemptions. The expansion of the AGI range means higher-earning households can now claim full dependent exemptions, potentially shifting more of the tax burden to other income brackets.

Potential points of contention

  • Fiscal impact unclear: The bill's revenue cost to the state budget is not specified in available records, raising questions about budget sustainability and competing spending priorities
  • Regressive nature: Increasing the AGI phase-out range for dependent exemptions may disproportionately benefit higher-income families while providing no relief to lower-income taxpayers
  • Standard deduction specifics absent: The exact new standard deduction amount is not detailed in the summary, making it difficult to assess who benefits and by how much

Compiled from official sources — confirm details with the bill’s official record.

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