AL SB400

Establishes catastrophe savings accounts for Alabama homeowners to cover insurance deductibles and self-insured losses from hurricanes, windstorms, and related events.

Allows individual taxpayers to deduct contributions to catastrophe savings accounts from Alabama state income tax, and exempts all interest income earned in these accounts from state income tax.

Sets contribution limits based on insurance deductible amounts: $2,000 for deductibles of $1,000 or less, up to $15,000 for higher deductibles, and up to $250,000 for self-insured homeowners with no insurance policy.

Imposes a 2.5% additional tax on distributions not used for qualified catastrophe expenses, with exceptions for account owners age 70 and older or those who no longer own a qualifying residence.

Protects catastrophe savings account balances from attachment, levy, garnishment, or legal process, and allows surviving spouses to inherit accounts without immediate income tax consequences.