Can you hear the rejoicing that’s going on down in Alabama?
That state’s governor has just signed into a law a measure that will keep the state’s tax collector from taking a piece of residents’ federal rebate check.
How state tax departments will treat the federal economic stimulus payment has been a persistent issue since the program was announced in January. In fact, I blogged about it here just a few days ago.
Now, the most apparent tax-the-rebate state, Alabama, is no longer in that hated category.
Alabama lawmakers approved legislation exempting the federal stimulus payment from state taxes during a special session at the end of May. The relief is part of a larger bill designed to give a tax break to small businesses that offer health insurance. It also closes tax loopholes used by multinational companies doing business in Alabama.
Overall, the state is expected to forgo $57 million by not taxing the federal rebate.
On an individual taxpayer basis, the dollar amount is less imposing. The Birmingham News reports that the new law will provide a couple receiving a $1,200 rebate a state tax savings
