(a) Effective for the 1997 state income tax year and through tax year ending December 31, 2019, an amount up to twenty-five thousand dollars ($25,000) received as severance, unemployment compensation or termination pay, or as income from a supplemental income plan, or both, by an employee who, as a result of administrative downsizing, is terminated, laid-off, fired, or displaced from his or her employment, shall be exempt from any state, county, or municipal income tax.
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Terms Used In Alabama Code 40-18-19.1

  • state: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Alabama Code 1-1-1
  • year: means a calendar year; but, whenever the word "year" is used in reference to any appropriations for the payment of money out of the treasury, it shall mean fiscal year. See Alabama Code 1-1-1
(b) Effective for tax years beginning after December 31, 2019, an amount up to fifty thousand dollars ($50,000) per tax year received as severance, unemployment compensation, or termination pay, or as income from a supplemental income plan, or both, by an employee who, as a result of administrative downsizing, is terminated, laid-off, fired, or displaced from his or her employment, shall be exempt from any state, county, or municipal income tax. The exemption is limited to the amount of the actual payment or payments, but in no case shall exceed fifty thousand dollars ($50,000) per tax year.
(c) Notwithstanding subsections (a) and (b), for taxable years 2020 and 2021, any amount received as unemployment compensation as a result of the federal Coronavirus Aid, Relief, and Economic Securities Act, as provided in 15 U.S.C. § 9021, 15 U.S.C. § 9023, or as provided in Section 201 or 203 (Extension of CARES Act Unemployment Provisions) of the Consolidated Appropriations Act, 2021 Pub. L. 116-260, or as a result of further extension of these benefits shall be exempt from any state, county, or municipal income tax.
(d) An employee whose termination from employment is due to misconduct shall not be allowed to take the tax exemption provided in this section.
(e) The department shall adopt rules to administer this section.
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