Income tax; certain compensation of civilian employees of Armed Forces, exempt

Summary

The bill would change Alabama tax law so that pay earned by civilian employees of the U.S. Department of Defense and Armed Forces is not taxed by the state when they work in a combat zone, are deployed outside the United States, or are activated for emergency response. It expands the existing exemption that already applies to active‑duty service members. The change would take effect for tax years starting on January 1, 2027.

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