AL HB219

Expands Alabama state income tax exemptions to include compensation earned by civilian employees of the U.S. Department of Defense and Armed Forces, in addition to active service members already exempt under current law.

Exempts compensation for civilian DOD/Armed Forces employees and active service members (including National Guard and Reserve components) when earned while in a combat zone designated by presidential executive order, deployed outside the United States, or activated for state or federal emergency response.

Applies to tax years beginning on or after January 1, 2026, with the act becoming effective on that date.