SB375 Summary

• Proposes the "Individual Flat Tax Act of 2018" as a constitutional amendment to Alabama's Constitution, requiring voter approval.

• Repeals Amendment 25 and Amendment 225 of Alabama's Constitution, effective January 1, 2019, eliminating existing income tax provisions and federal tax deductions.

• Establishes a flat individual income tax rate of 4.20 percent on Alabama residents and non-residents earning income from Alabama sources, effective for tax years beginning January 1, 2019.

• Allows limited deductions and exemptions: exemption of defined benefit retirement income up to $70,000 ($140,000 joint), deduction for primary home mortgage interest, charitable contributions, and $9,000 basic income deduction ($18,000 joint).

• Requires the Legislature to enact general laws to implement the amendment and directs election officials to place the proposed amendment on the next statewide primary or general election ballot.