Alabama state reps. pushing to make COVID-19 stimulus payments tax exempt
Alabama State Reps. Andy Whitt (R-Harvest) and Arnold Mooney (R-Indian Springs) have pre-filed bills to exempt from Alabama state taxes the $1,200 stimulus payments sent by the federal government in the spring.
The two bills, filed separately on October 29, would also exclude from Alabama state taxes any forgiven loan a small business received under the Paycheck Protection Program.
“Collecting state taxes on those payments seems almost immoral when you consider the reasons they were awarded in the first place,” said Whitt in a statement sent to Yellowhammer.
In an interview on Monday, Mooney told Yellowhammer News that he considered making the COVID relief tax-exempt the kind of thing he was elected to do.
“We just need to take care of our citizens; that is what we’re down there for. We’re down there to serve them,” he explained with regards to what drew him to the cause.
Mooney said he had spoken with House leadership and Governor Kay Ivey’s staff in drafting the bill, and received positive feedback from both.
Whitt believes that, due to better than expected tax revenue in 2020, Alabama can “easily provide this tax exemption without affecting state services, agencies, programs, or public education.”
Both the stimulus payments, officially titled Economic Impact Payments, and the Paycheck Protection Program (PPP), were created by the federal government’s massive CARES Act passed in March to help the American economy weather the coronavirus pandemic.
Estimates at the time of the CARES Act’s passage noted that approximately 90% of American adults would receive the Economic Impact Payments, which were $1,200 for individuals and $2,400 for married couples plus $500 per dependent child. Those with higher incomes received smaller checks, and some in the highest of income brackets were deemed ineligible for the payments.
Whitt shared data that estimated the 65,872 PPP loans given to Alabama businesses saved 672,000 jobs.
PPP loans were eligible to be forgiven if the funds were spent on certain categories like payroll or rent. Unless the legislature passes a new law, the amount of money forgiven would be taxable under Alabama state law.
“Many Alabamians are still struggling to find jobs, reopen their businesses, and recover the losses they suffered while our state and nation tried to limit the spread of the virus. Allowing them to know that state taxes will not be collected on these payments will provide them with an additional measure of relief, and, I believe, an additional boost to Alabama’s economy,” remarked Whitt.