Alabama has established new income tax exemptions for qualifying nonresident workers under House Bill 379, signed by Governor Ivey on May 13.
Under the new Section 40-18-2.2, nonresidents working 30 or fewer days in Alabama annually may qualify for exemption if they work in multiple states and their home state provides similar reciprocal tax treatment. The exemption excludes professional athletes, entertainers, and public figures. Employers are not required to withhold taxes for qualifying employees. However, if said employees exceed the aforementioned 30-day threshold, withholding and remittance of tax to the state for every calendar day the employee performs employment duties in Alabama in that year will be required, including the first 30 days.
The legislation also provides an exemption for disaster and emergency-related work under official declarations and establishes employer safe harbor provisions for good faith compliance with time tracking requirements.
The exemption provisions take effect for tax years beginning January 1, 2026, with the Act becoming effective October 1, 2025.
To review House Bill 379 in greater detail, click here.
