AL SB231

Individual taxpayers may deduct contributions made to an Alabama Achieving a Better Life Experience (ABLE) savings account up to $5,000 per year, regardless of whether they itemize deductions.

The deduction applies to contributions made on or after January 1, 2021 to qualifying ABLE savings accounts by or on behalf of the taxpayer.

Nonqualified withdrawals trigger recapture of the deduction plus an additional 10 percent penalty, added back to the taxpayer's income in the year the withdrawal occurs.

Rollover amounts transferred to an Alabama ABLE savings account are excluded from the deduction limit if an Alabama income tax deduction was already claimed for those amounts.

The act sunsets on December 31, 2025, unless extended by the Legislature, and is effective for tax years beginning after December 31, 2020.