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 status shows the bill was passed by the legislature but later indefinitely postponed; however, the effective date listed in the text is January 1, 2027. The final legal effect depends on executive action not shown here.

Exempting Certain Military Civilian Pay from Alabama Income Tax

This bill removes state income tax on pay for civilian workers of the U.S. Department of Defense and Armed Forces when they are in combat zones, deployed outside the United States, or activated to support emergency responses.

What This Bill Does

Expands an existing tax exemption to include certain compensation paid to civilian employees of the U.S. Department of Defense and Armed Forces.
Removes Alabama state income tax on pay earned while these workers are in a combat zone designated by the President.
Removes Alabama state income tax on pay earned while these workers are deployed to locations outside the United States.
Removes Alabama state income tax on pay earned when these workers are activated by the Governor of Alabama or the President to support emergency responses within or outside the United States.
Sets the start date for this change as January 1, 2027.

Who It Names or Affects

Civilian employees of the U.S. Department of Defense and Armed Forces who earn compensation under specific conditions described in the bill.
Members of the National Guard and Reserve components serving on active duty while meeting the same conditions as civilian employees.

Terms To Know

Combat zone: An area designated by an executive order of the President where military operations are taking place.
Deployed: Sent to a location outside the United States for official duty or service.
Activated: Called into active service by the Governor of Alabama or the President to help with state or federal emergency responses.

Limits and Unknowns

The bill only applies to tax years beginning on or after January 1, 2027.
The text does not define which specific civilian jobs qualify beyond being employees of the Department of Defense or Armed Forces earning compensation under the listed conditions.

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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