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HB 217

Relating to gross income; to amend Section 40-18-14, Code of Alabama 1975; to exclude difficulty of care payments from gross income.

2025 Regular Session Introduced by Mike Shaw

Alabama bill excludes difficulty-of-care payments from taxable income, reducing caregiver tax burden but forgoing state revenue.

Read for the first time and referred to the House Committee on Ways and Means Education
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Bill Summary · HB 217

Legislative bill overview

HB 217 proposes to amend Alabama's tax code to exclude "difficulty of care payments" from the definition of gross income for tax purposes. This means individuals receiving such payments would not have to count them as taxable income, potentially reducing their tax liability.

Why is this important

Difficulty of care payments typically compensate caregivers (often family members) for the extra costs and labor involved in caring for individuals with disabilities, chronic illnesses, or elderly dependents. Excluding these from taxable income could provide meaningful financial relief to caregivers who are already bearing substantial personal and financial burdens. However, it also represents foregone state tax revenue that must be accounted for in the budget.

Potential points of contention

  • Revenue impact: The fiscal cost to the state depends on how many Alabamians receive such payments and the amounts involved; this affects what services or programs might need funding cuts elsewhere
  • Definition ambiguity: The bill's effectiveness depends on how "difficulty of care payments" is precisely defined in regulations—overly broad definitions could create tax avoidance opportunities, while narrow ones might exclude legitimate caregivers
  • Equity concerns: The benefit primarily helps middle to upper-income families who can afford to make formal payments to caregivers; lower-income families relying on informal care arrangements may not benefit equally

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

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