Bill > HB268

This bill amends Alabama's state income tax law to add a new tax exemption for lottery winnings. Specifically, the bill adds a provision that exempts all proceeds from prizes won in any state lottery from state income taxation. The exemption comes with two important conditions: first, it will become void if a statewide constitutional amendment authorizing games of chance is ratified, and second, the exemption will be effective beginning with the tax year starting January 1, 2026. The bill does not specify a limit on the amount of lottery winnings that can be exempted, meaning all lottery prize amounts would be tax-free under this provision. The legislation is part of Alabama's ongoing updates to its income tax code, which already includes numerous other specific exemptions for retirement income, certain government benefits, and dependent-related deductions. The bill will take effect on October 1, 2025, setting the stage for the tax exemption to be implemented in the 2026 tax year.