After cutting taxes for food, temporarily exempting overtime pay from income tax and giving Alabamians tax rebates in 2023, the Alabama Legislature limited major tax breaks to Alabamians during its 2024 session.

In the 2024 “Working for Alabama” bipartisan workforce development legislative package intended to increase workforce participation, the Legislature did approve a workforce housing tax credit and childcare tax credits for employers and daycares.

The Legislature also amended the 2023 Alabama income tax overtime exemption to align it with federal overtime and railway laws. Unless extended, that exemption ends June 30, 2025.

SALES TAXES

Cautious about cutting anymore revenue sources, the Alabama Senate did not advance a new sales tax holiday for outdoor activities even though the tax holiday had a funding mechanism tied to it.

A major sales tax exemption for diapers, breast pumps and menstrual products was poised for final approval on the final day of the 2024 regular session but the full Senate never debated it.

The Legislature did enact a sales tax exemptions for hearing aids in 2024.

EXCLUDING GROSS RECEIPTS

Legislation that would have allowed businesses that pay municipal business licenses based on gross receipts to deduct excise taxes paid to federal, state and local governments from those receipts died in committee. Businesses generally pay excise taxes, which are included in the price of a product or a service, on fuel, tobacco and alcohol.

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