SB117 Summary

• Amends Sections 40-18-311 and 40-18-312 of the Alabama Code to establish the Homeowner's Insurance Catastrophic Event Planning Act for tax deductions related to catastrophe savings accounts.

• Allows individual taxpayers a state income tax deduction equal to two times the amount contributed to a catastrophe savings account, with interest income from the account exempt from state income tax.

• Sets contribution limits based on qualified deductibles: individuals with deductibles of $1,000 or less may contribute up to $4,000 per year (maximum $12,000 total); those with deductibles over $1,000 may contribute up to $15,000 or twice their deductible (whichever is less); self-insured individuals may contribute up to $250,000.

• Distributions from catastrophe savings accounts are included in taxable income unless used for qualified catastrophe expenses, with a 2.5% additional tax applied to non-qualifying distributions (except upon account holder's death or age 70 and above).

• Effective for tax years beginning on or after January 1, 2015.