AL SB342

Amends Section 40-18-21 of the Alabama Code to limit out-of-state income tax credits to offset only the portion of Alabama income tax liability attributable to non-Alabama source income.

Requires calculation of the credit limitation by multiplying the taxpayer's total Alabama income tax liability by a fraction where the numerator is income derived from other states/territories and the denominator is total Alabama adjusted gross income.

Allows timely filed refund petitions for overpaid income tax for tax years 2013-2017 to be granted without applying the new limitation, with a filing deadline of June 30, 2018 for pre-2017 tax years.

Prohibits the Alabama Department of Revenue from issuing any tax assessments or adjustments based on the new limitation for tax years ending on or before December 31, 2017, and voids any assessments previously entered in violation of this provision.

Becomes effective for tax years beginning on or after January 1, 2018.