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Bill Summary · HB 379

Summary of House Bill 379: Income Tax Exemption for Remote Workers

Bill Number: HB 379
Title: Income tax, remote workers exempt under defined circumstances
Status: Enacted
Introduced: March 4, 2025
Effective Date: October 1, 2025 (with provisions effective for tax years beginning January 1, 2026)
Sponsor: Representative Danny Garrett
Subject: Taxation & Revenue

Purpose and Intent

House Bill 379 aims to amend Alabama's income tax laws to provide specific exemptions for nonresident remote workers under certain conditions. The bill seeks to attract remote workers to the state by reducing their tax burden, thereby potentially boosting economic activity and job creation.

Key Provisions

  1. Amendment to Existing Tax Code:

    • The bill amends Section 40-18-2 of the Code of Alabama 1975 to exclude certain nonresidents from income tax obligations.

  2. New Section Added:

    • A new section, 40-18-2.2, is added to define the conditions under which nonresident individuals can be exempt from Alabama state income tax.

  3. Exemption Criteria:

    • Nonresident individuals are exempt from state income tax if:
      • They perform employment duties in Alabama for 30 days or fewer in a calendar year.
      • They work in multiple states during the year.
      • Their compensation is not related to work as a professional athlete, entertainer, or public figure.
      • Their state of residence either provides a similar tax exemption, does not impose an income tax, or their income is exempt under federal law.

  4. Employer Withholding Requirements:

    • Employers are not required to withhold taxes for employees who meet the exemption criteria. However, if an employee exceeds the 30-day threshold, taxes must be withheld for every day worked in Alabama.

  5. Disaster and Emergency Work:

    • Nonresidents performing temporary work related to disaster recovery are also exempt from state and local taxes.

  6. Time and Attendance Systems:

    • Employers maintaining a time and attendance system to track employee work locations may use this data to determine tax obligations.

  7. No Penalties for Noncompliance:

    • Employers will not incur penalties for failing to withhold taxes if they relied on a time and attendance system or employee declarations regarding workdays in Alabama.

Impact

  • Economic Implications: The bill is expected to decrease individual income tax receipts to the Education Trust Fund, although the exact financial impact is undetermined and will depend on the number of nonresidents qualifying for the exemption.
  • Target Audience: The legislation primarily affects nonresident remote workers and their employers, potentially making Alabama a more attractive location for remote work.

Procedural Timeline

  • Enactment Date: May 14, 2025
  • The bill underwent several readings and amendments in both the House and Senate before being enacted, reflecting a collaborative legislative process.

In summary, HB 379 represents a strategic move by Alabama to adapt its tax policy to the growing trend of remote work, aiming to enhance its appeal to nonresident workers while also addressing the state's revenue considerations.

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

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