Alabama Tax Changes - November 2024
Week Of 11.04.2024
Personal Income Tax:
- Overtime Pay Exemption:
- Rule 810-3-72-.02: Effective December 15, 2024, this rule is amended to exclude overtime pay from gross income for hourly wage employees for the period January 1, 2024 to September 30, 2024.
- Rule 810-3-72-.03: Effective December 15, 2024, this new rule defines the overtime pay exemption for the period October 1, 2024 to June 30, 2025, aligning it with the U.S. Fair Labor Standards Act.
- Rule 810-3-75-.01: This rule is also amended to guide employers on reporting exempt overtime wages on employee W-2s.
Contractors Gross Receipts Tax:
- Rule 810-6-5-.03:
- Effective December 15, 2024, this rule clarifies that the contractors gross receipts tax applies to all payments made to a contractor for public construction projects, regardless of the payment method (contract, purchase order, etc.).
Durable Medical Equipment:
- Rule 810-6-5-.29: Effective December 15, 2024, this rule is amended to require healthcare providers claiming an exemption for purchases of durable medical equipment to obtain a certificate of exemption from the Department prior to purchase.
- Effective Date: September 1, 2024. Purchases made after this date are subject to tax unless the healthcare provider provides the certificate to the seller at the time of purchase.
Agricultural Livestock Fencing:
- Rule 810-6-3-.01.03: Effective December 15, 2024, this new rule provides guidance on the exemption for agricultural livestock fencing materials.
- Exemption Period: October 1, 2024 to September 30, 2029. Up to $25,000 worth of fencing materials (t-posts, wood posts, barbed wire, etc.) used for agricultural livestock fencing is exempt from state sales and use tax.
Contractor's Gross Receipts Tax Discount:
- Rule 810-6-5-.03.01: Effective December 15, 2024, this rule is rewritten to provide clearer guidance on the calculation of the contractor's gross receipts tax discount.
2025 Severe Weather Preparedness Sales Tax Holiday:
- The Alabama Department of Revenue has updated the list of counties and municipalities participating in the 2025 Alabama severe weather preparedness sales tax holiday, which will be held from February 21 to February 23, 2025.
Key Dates:
- December 15, 2024: Effective date for all rule changes.
- January 1, 2024 to September 30, 2024: Overtime pay exemption period under Rule 810-3-72-.02.
- October 1, 2024 to June 30, 2025: Overtime pay exemption period under Rule 810-3-72-.03.
Week Of 11.21.2024
Alabama Sales & Use Taxes—Alabama local sales and use tax changes.
Effective December 1, 2024, the Town of Saint Florian has asked the Alabama Department of Revenue to begin collecting the town's sales and use taxes. Consequently, the first Dauphin Island local tax return filed with the Department will be for the tax period ending December 31, 2024, which is due on or before January 21, 2025. Saint Florian taxes are to be reported using My Alabama Taxes (MAT). Effective December 1, 2024, the City of Saraland has eliminated the police jurisdiction outside of the corporate limits of the city. Consequently, City of Saraland taxes and fees will no longer be levied within the former police jurisdiction area. (Notice, Ala. Dept. Rev., 11/14/2024; Notice, Ala. Dept. Rev., 11/14/2024.)
Alabama Personal Income Tax Alabama amends rules regarding overtime pay exemption.
Effective December 15, 2024, the Alabama Department of Revenue has amended Rule 810-3-72-.02, "Overtime Pay Exemption." Pursuant to Act 2023-421, the amended rule provides that for the period beginning January 1, 2024, and ending September 30, 2024 (previously June 30, 2025), gross income does not include amounts received by an hourly wage paid employee for hours worked in excess of 40 hours in a week. This rule is being amended in conjunction with the adoption of Rule 810-3-72-.03 (see State Tax Update, 11/04/2024) which provides an updated definition for the overtime pay exemption beginning October 1, 2024. Effective December 15, 2024, the Department has also amended Rule 810-3-75-.01, "Withholding Statement Furnished Employees," to provide guidance to employers on how to report exempt overtime wages on an employee's W-2.
Alabama Personal Income Tax Alabama adopts rule regarding exemption for overtime wages.
Effective December 15, 2024, the Alabama Department of Revenue has adopted Rule 810-3-72-.03, "Overtime Pay Exemption Pursuant to Act 2024-437: U.S. Fair Labor Standards Act Alignment." The rule reflects amendments made to the income tax exemption for overtime pay by Act 2024-437 (see State Tax Update, 05/21/2024). The rule provides that, for periods beginning on October 1, 2024, and ending June 30, 2025, gross income does not include amounts paid as overtime in accordance with the U.S. Fair Labor Standards Act.
Alabama Sales & Use Taxes Alabama amends contractors gross receipts tax rule.
Effective December 15, 2024, the Alabama Department of Revenue has amended Rule 810-6-5-.03, "Contractors Gross Receipts Tax." The amended rule clarifies that the contractors gross receipts tax applies to all payments made to a contractor or contract assignee whether the payments are made pursuant to a contract, purchase order, supplemental agreement, change request, or other agreement to construct, reconstruct, or build any public highway, road, bridge, street, or tunnel.
Alabama Sales & Use Taxes Alabama amends rule regarding exemption for purchases of durable medical equipment.
Effective December 15, 2024, the Alabama Department of Revenue has amended Rule 810-6-5-.29, "Oxygen and Durable Medical Equipment." Pursuant to Act 2024-391 (see State Tax Update, 05/17/2024), the amended rule provides that, effective September 1, 2024, any healthcare provider claiming an exemption from sales and use taxes must obtain and maintain a certificate of exemption from the Department prior to the purchase and must provide the certificate to the seller at the time of purchase. Any purchase made on or after September 1, 2024, will be subject to tax, unless the healthcare provider provides the certificate to the seller at the time of purchase.
Alabama Sales & Use Taxes Alabama adopts rule regarding exemption for agricultural livestock fencing materials.
Effective December 15, 2024, the Alabama Department of Revenue has adopted Rule 810-6-3-.01.03, "Fencing for Agriculture Livestock Applications," to provide guidance regarding the agriculture livestock fencing exemption (see State Tax Update, 05/07/2024). The rule provides that, for the period beginning on October 1, 2024 and ending on September 30, 2029, up to $25,000 from the sale of fencing materials, such as t-posts, wood posts, barbed wire, net wire, smooth wire, standard metal gates, and other like materials used for the purpose of fencing in agriculture livestock is exempt from the state sales and use tax.
Alabama Sales & Use Taxes Alabama revises rule regarding contractor's gross receipts tax discount.
Effective December 15, 2024, the Alabama Department of Revenue has repealed and replaced Rule 810-6-5-.03.01, "Contractor's Gross Receipts Tax Discount." The rule has been rewritten to provide clearer guidance on the calculation of the contractor's gross receipts tax discount.
Alabama Sales & Use Taxes—Alabama 2025 severe weather preparedness sales tax holiday participants.
The Alabama Department of Revenue has updated the list of counties and municipalities participating in the 2025 Alabama severe weather preparedness sales tax holiday being held from February 21 to February 23, 2025. (Alabama Severe Weather Preparedness Tax Holiday Participating Localities, Alabama Department of Revenue, 10/31/2024.)
Week Of 11.21.2024
Alabama Sales & Use Taxes—Alabama local sales and use tax changes.
Effective December 1, 2024, the Town of Saint Florian has asked the Alabama Department of Revenue to begin collecting the town's sales and use taxes. Consequently, the first Dauphin Island local tax return filed with the Department will be for the tax period ending December 31, 2024, which is due on or before January 21, 2025. Saint Florian taxes are to be reported using My Alabama Taxes (MAT). Effective December 1, 2024, the City of Saraland has eliminated the police jurisdiction outside of the corporate limits of the city. Consequently, City of Saraland taxes and fees will no longer be levied within the former police jurisdiction area. (Notice, Ala. Dept. Rev., 11/14/2024; Notice, Ala. Dept. Rev., 11/14/2024.)
Alabama Personal Income Tax Alabama amends rules regarding overtime pay exemption.
Effective December 15, 2024, the Alabama Department of Revenue has amended Rule 810-3-72-.02, "Overtime Pay Exemption." Pursuant to Act 2023-421, the amended rule provides that for the period beginning January 1, 2024, and ending September 30, 2024 (previously June 30, 2025), gross income does not include amounts received by an hourly wage paid employee for hours worked in excess of 40 hours in a week. This rule is being amended in conjunction with the adoption of Rule 810-3-72-.03 (see State Tax Update, 11/04/2024) which provides an updated definition for the overtime pay exemption beginning October 1, 2024. Effective December 15, 2024, the Department has also amended Rule 810-3-75-.01, "Withholding Statement Furnished Employees," to provide guidance to employers on how to report exempt overtime wages on an employee's W-2.
Alabama Personal Income Tax Alabama adopts rule regarding exemption for overtime wages.
Effective December 15, 2024, the Alabama Department of Revenue has adopted Rule 810-3-72-.03, "Overtime Pay Exemption Pursuant to Act 2024-437: U.S. Fair Labor Standards Act Alignment." The rule reflects amendments made to the income tax exemption for overtime pay by Act 2024-437 (see State Tax Update, 05/21/2024). The rule provides that, for periods beginning on October 1, 2024, and ending June 30, 2025, gross income does not include amounts paid as overtime in accordance with the U.S. Fair Labor Standards Act.
Alabama Sales & Use Taxes Alabama amends contractors gross receipts tax rule.
Effective December 15, 2024, the Alabama Department of Revenue has amended Rule 810-6-5-.03, "Contractors Gross Receipts Tax." The amended rule clarifies that the contractors gross receipts tax applies to all payments made to a contractor or contract assignee whether the payments are made pursuant to a contract, purchase order, supplemental agreement, change request, or other agreement to construct, reconstruct, or build any public highway, road, bridge, street, or tunnel.
Alabama Sales & Use Taxes Alabama amends rule regarding exemption for purchases of durable medical equipment.
Effective December 15, 2024, the Alabama Department of Revenue has amended Rule 810-6-5-.29, "Oxygen and Durable Medical Equipment." Pursuant to Act 2024-391 (see State Tax Update, 05/17/2024), the amended rule provides that, effective September 1, 2024, any healthcare provider claiming an exemption from sales and use taxes must obtain and maintain a certificate of exemption from the Department prior to the purchase and must provide the certificate to the seller at the time of purchase. Any purchase made on or after September 1, 2024, will be subject to tax, unless the healthcare provider provides the certificate to the seller at the time of purchase.
Alabama Sales & Use Taxes Alabama adopts rule regarding exemption for agricultural livestock fencing materials.
Effective December 15, 2024, the Alabama Department of Revenue has adopted Rule 810-6-3-.01.03, "Fencing for Agriculture Livestock Applications," to provide guidance regarding the agriculture livestock fencing exemption (see State Tax Update, 05/07/2024). The rule provides that, for the period beginning on October 1, 2024 and ending on September 30, 2029, up to $25,000 from the sale of fencing materials, such as t-posts, wood posts, barbed wire, net wire, smooth wire, standard metal gates, and other like materials used for the purpose of fencing in agriculture livestock is exempt from the state sales and use tax.
Alabama Sales & Use Taxes Alabama revises rule regarding contractor's gross receipts tax discount.
Effective December 15, 2024, the Alabama Department of Revenue has repealed and replaced Rule 810-6-5-.03.01, "Contractor's Gross Receipts Tax Discount." The rule has been rewritten to provide clearer guidance on the calculation of the contractor's gross receipts tax discount.
Alabama Sales & Use Taxes—Alabama 2025 severe weather preparedness sales tax holiday participants.
The Alabama Department of Revenue has updated the list of counties and municipalities participating in the 2025 Alabama severe weather preparedness sales tax holiday being held from February 21 to February 23, 2025. (Alabama Severe Weather Preparedness Tax Holiday Participating Localities, Alabama Department of Revenue, 10/31/2024.)