AL SB71

Expands Alabama's income tax exemption to include compensation for civilian employees of the U.S. Department of Defense and Armed Forces, in addition to active service members already covered.

Exempts compensation earned while an individual is in a combat zone designated by presidential executive order, deployed to locations outside the United States, or activated by the Governor or President to support emergency response.

Amends Section 40-18-3 of the Code of Alabama 1975 to clarify that the exemption applies to individuals serving as civilian employees or active service members, including National Guard and Reserve components.

Applies to tax years beginning on or after January 1, 2026, with an effective date of January 1, 2026.