SB69 • 2026

Income tax; certain compensation of civilian employees of Armed Forces, exempt

Labor Taxes

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: Givhan
Last action: 2026-04-07
Official status: Indefinitely Postponed in House of Origin
Effective date: Not listed

Plain English Breakdown

The official source material does not provide specific details about the compensation amounts or additional qualifications for civilian employees.

Income Tax Exemption for Certain Civilian Employees of the Armed Forces

This bill would exempt certain compensation received by civilian employees of the U.S. Department of Defense and Armed Forces from state income tax in Alabama.

What This Bill Does

Expands an existing exemption to include civilian employees of the U.S. Department of Defense and Armed Forces, not just active service members.
Specifies that this exemption applies to compensation earned while these civilians are in a combat zone, deployed outside the United States, or activated by state or federal authorities for emergencies.

Who It Names or Affects

Civilian employees of the U.S. Department of Defense and Armed Forces
The State of Alabama's income tax system

Terms To Know

Combat Zone: A designated area where military operations are taking place.
Deployed: Sent to a location outside the United States for military service or support.

Limits and Unknowns

The bill does not specify how much compensation is exempt.
It's unclear if there are any limits on which civilian employees qualify for this exemption beyond those mentioned in the bill.

Bill History

2026-04-07 Senate
Currently Indefinitely Postponed
2026-02-12 Senate
Read for the Second Time and placed on the Calendar
2026-02-11 Senate
Reported Out of Committee House of Origin
2026-01-13 Senate
Pending Committee Action in House of Origin
2026-01-13 Senate
Read for the first time and referred to the Senate Committee on Finance and Taxation Education

Official Summary Text

Income tax; certain compensation of civilian employees of Armed Forces, exempt

Current Bill Text

Read the full stored bill text

SB69 INTRODUCED
Page 0
SB69
SLKSL57-1
By Senators Givhan, Chesteen, Carnley, Livingston
RFD: Finance and Taxation Education
First Read: 13-Jan-26
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SLKSL57-1 11/06/2025 JF (F)JF 2025-2722
Page 1
First Read: 13-Jan-26
SYNOPSIS:
Under current law, certain compensation for
active service members of the United States Armed
Forces is not subject to state income tax.
This bill would expand this exemption to include
certain compensation of civilian employees of the U.S.
Department of Defense and Armed Forces.
A BILL
TO BE ENTITLED
AN ACT
Relating to income tax; to amend Section 40-18-3, Code
of Alabama 1975, to exempt certain compensation of civilian
employees of the U.S. Department of Defense and Armed Forces
from state income tax.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Section 40-18-3, Code of Alabama 1975, is
amended to read as follows:
"§40-18-3
(a) The salaries, fees, commissions, or other income of
officers or agents of the United States or its agencies and
instrumentalities or its contractees, received from the United
States or from its agencies and instrumentalities, shall be
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SB69 INTRODUCED
Page 2
States or from its agencies and instrumentalities, shall be
subject to income taxes levied by the State of Alabama as
other income is taxed, but without discrimination, and only to
the same extent and in the same manner as other income is
taxed, insofar as the State of Alabama may be constitutionally
or legally authorized to tax such income ; provided, that .
(b) Notwithstanding subsection (a), money paid by the
United States to a person an individual as compensation as a
civilian employee of the U.S. Department of Defense or Armed
Forces, or for active service as a member of the armed
forces Armed Forces of the United States, including members of
the National Guard and Reserve components, shall not be
subject to income taxes levied by the State of Alabama, for
compensation earned while the individual is:
(1) In in a combat zone designated by an executive order
of the President of the United States ,;
(2) Deployed deployed to locations outside the United
States ,; or
(3) Activated activated by the Governor of the State of
Alabama or the President of the United States to support state
or federal response to emergencies within or outside of the
United States shall not be subject to income taxes levied by
the State of Alabama . "
Section 2. The provisions of this act shall apply to
tax years beginning on or after January 1, 2027.
Section 3. This act shall become effective on January
1, 2027.
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