More taxpayers will qualify for the maximum standard deduction on their Alabama income tax returns for tax years after 2018. Also, certain foreign income is now exempt from Alabama income tax if it is exempt from federal income tax.
For tax years beginning after 2018, the adjusted gross income (AGI) levels at which the maximum standard deduction is allowed are increased. Thus, more taxpayers may claim the maximum standard deduction. The AGI limit for claiming the maximum standard deduction increases from $20,000 to $23,000 for:
- single taxpayers;
- head of family taxpayers; and
- married taxpayers filing jointly.
The AGI limit increases from $10,000 to $10,500 for married taxpayers filing separate returns.
Foreign Income Exemption
In addition, beginning January 1, 2018, the following income is exempt from Alabama income tax to the extent it is exempt from federal income tax:
- amounts that an individual receives as a housing allowance from sources in a foreign country; and
- earned income attributable to services the individual performed during the tax period.
Act 232 (S.B. 76), Laws 2018, effective March 15, 2018, and applicable as noted
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