Legislative session expected to address new tax credits, infrastructure problems.
The Alabama Legislative Session begins on Feb. 2, and there are several issues likely to be debated that will impact small business owners. Here’s a look at them.
HSA Tax Deduction
Legislation seeking to align Alabama’s income tax law to federal law with regard to health savings accounts—SB 9, HB 70 and HB 215—failed in the 2015 session, but is expected to resurface this year. These bills would give a state income tax deduction to those who make contributions to their HSAs to pay for healthcare costs.
Tax Rate Notification
Legislation on this topic—SB 322—also failed in the 2015 session, but we expect to see it again in the 2016 session. Under this bill, taxpayers would not be liable for collection and charge of incorrect tax rates based on the rate published by the Alabama Department of Revenue website. Local governments would have procedures with which to notify ADOR of rate changes, and these changes wouldn’t take effect until the first day of the third month following the notification. This would allow business owners time to update their bookkeeping for local and state changes and relieve them of penalties or interest for use of outdated rates.
Two bills, which would give business owners tax credits for hiring veterans and for establishing an apprenticeship training program, are currently in draft form. “A trained and ready-to-work workforce is a priority for Alabama business owners,” says Rosemary Elebash, NFIB’s Alabama state director.
General Fund Cuts
Alabama legislators have stayed opposed to tax increases in the face of the state’s budget woes, and as a result of this and rising costs, cuts to the General Fund are expected this year, the Montgomery Advertiser reported last month.
The chairs of the Legislature’s General Fund committees, Representative Steve Clouse and Senator Trip Pittman, told the Advertiser that level funding in the budget was an optimistic best-case scenario.
In the current budget, Medicaid, Corrections, Mental Health, Human Resources and Pardons and Paroles were shielded from cuts, but Sen. Pittman says he doesn’t think any agency would get protection this year. Budget committees will hold budget hearings this month in preparation for the beginning of session.
Alabama earned a C- for its infrastructure system of roads, bridges, ports, railroads, airports and more, according to an assessment recently conducted by the American Society of Civil Engineers.
ASCE studied 11 infrastructure categories, grading each individually:
Dams (N/A—Alabama has no dam safety program)
Drinking water (C+)
Inland waterways (D+)
“Whether you’re driving across roads and bridges, taking a shower, or charging your cell phone, infrastructure affects everyone in Alabama,” the study says. “Infrastructure also impacts our businesses and helps move our economy, taking freight from ports to store shelves and taking workers to their jobs.”
Proposals to solve this growing problem are expected to be debated in session, starting next month.