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

SB 71 would expand Alabama's existing state income tax exemption to include certain compensation paid to civilian employees of the U.S. Department of Defense and Armed Forces. This exemption, currently available to active military members, would now apply to civilian employees earning compensation while working in a combat zone, deployed outside the U.S., or activated by Alabama's Governor or the President for emergency response. The change would take effect for tax years beginning on or after January 1, 2026. It does not alter tax treatment for civilian employees outside these specific circumstances.