(a) An individual taxpayer shall be allowed a deduction from gross income, regardless of whether the taxpayer itemizes income tax deductions in calculating the income tax imposed pursuant to Section 40-18-5, for contributions made to an Alabama Achieving a Better Life Experience (ABLE) savings account, defined in Section 16-33C-3, as prescribed by this section. (b) An individual taxpayer will be allowed to deduct contributions made on or after January 1, 2021, to an Alabama ABLE savings account, by or on behalf of such individual, of an amount up to five thousand dollars ($5,000) per annum. If the taxpayer makes a nonqualified withdrawal as defined by Section 529A of the Internal Revenue Code, 26 U.S.C. § 529A, the amount of the nonqualified withdrawal, plus 10 percent of the amount withdrawn, shall be added back to the income of the contributing taxpayer in the year the nonqualified withdrawal was distributed. Rollover amounts transferred to an Alabama ABLE savings account shall not be considered contributions for purposes of this deduction to the extent that an Alabama income tax deduction has already been claimed for the rollover contribution amounts. (c) The Department of Revenue may adopt rules to assist with the administration of this section. (d) The deduction allowed under this section may not be claimed for tax years that begin after December 31, 2030.
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