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Alabama2026Enacted

HB250

Changes to Alabama Individual Income Tax Exclusions

Last scannedAug 24, 2026, 9:06 AM

In one sentence

This law changes how Alabama calculates taxable income by adding new exclusions for employer contributions to Trump Accounts and making permanent the exclusion for employer-paid education loans.

What it does

  • Excludes from gross income any amounts an employer contributes to a Trump Account for an employee or their dependent, if those amounts are excluded under federal law.
  • Makes it permanent that employers can pay principal or interest on qualified education loans without those payments counting as taxable income for the employee, if excluded under federal law.
  • Applies these new tax rules only to tax years starting on or after January 1, 2026.

Who it affects

  • Individual taxpayers in Alabama who receive employer contributions to Trump Accounts or have their education loans paid by an employer.
  • Employers who make payments into employee Trump Accounts or pay off qualified education loans for employees.

Limits and unknowns

  • The bill does not define what a 'Trump Account' is or list the rules required to open one.
  • These exclusions only apply if the amounts are also excluded from federal gross income under specific sections of Pub. L. 119-21 (the One, Big, Beautiful Bill Act).
  • The bill relies on future federal laws that may not yet be fully detailed or enacted at the time this state law takes effect.

Plain language

Terms to know

Gross Income
All money earned from wages, salaries, and other sources before any taxes are taken out, as defined in Alabama law.
Trump Account
A specific type of account mentioned in the bill where employer contributions can be excluded from taxable income if federal law allows it.
Qualified Education Loan
A loan taken out to pay for education expenses that meets certain legal requirements set by federal law, allowing employers to make payments without them counting as taxable income.

Official record

Sources

Validated
Official bill pageIntroduced textCurrent bill textStored full record

Official summary

This act amends Section 40-18-14, Code of Alabama 1975, for tax years beginning on or after January 1, 2026, to: (1) exclude amounts contributed by an employer to the Trump Account of an employee or their dependent from the employee's gross income; and (2) permanently exclude amounts of principal or interest paid by an employer on any qualified education loan of an employee from the employee's gross income.

Official activity

Bill history

  1. EnactedHouse
  2. Delivered to GovernorHouse
  3. Signature RequestedSenate
  4. Motion to Read a Third Time and Pass - Adopted Roll Call 1219 (Yeas 26, Nays 6)Senate
  5. Third Reading in Second House (Yeas 34, Nays 0)Senate
  6. EnrolledHouse
  7. Ready to EnrollHouse
  8. Read for the Second Time and placed on the CalendarSenate
  9. Reported Out of Committee Second HouseSenate
  10. Motion to Read a Third Time and Pass - Adopted Roll Call 395 (Yeas 85, Nays 0)House
  11. Third Reading in House of Origin (Yeas 98, Nays 0)House
  12. Pending Committee Action in Second HouseSenate
  13. Read for the first time and referred to the Senate Committee on Finance and Taxation EducationSenate
  14. Read for the Second Time and placed on the CalendarHouse
  15. Reported Out of Committee House of OriginHouse
  16. Pending Committee Action in House of OriginHouse
  17. Read for the first time and referred to the House Committee on Ways and Means EducationHouse