Earned Income Tax Credit (EITC)

Alabama does not currently offer a state-level EITC.

Notes:

• In 2023, Gov. Kay Ivey passed a one-time tax rebate as part of the state budget. The tax rebate provides individuals with $150 and $300 to couples who file jointly.
• In 2022, Gov. Kay Ivey signed a bill allowing Alabama filers to calculate their federal income tax deduction without factoring in federal tax credits, including the federal EITC, potentially lowering their state tax owed.²
• In 2015, legislators introduced a bill that would have created a state EITC at 10% of the federal level but the measure failed to pass a committee vote.¹

Child Tax Credit (CTC)

Alabama does not currently offer a state-level CTC.

Latest Legislative Actions: Gov. Kay Ivey signed House Bill 231 into law, allowing families who received the federal CTC to save money on their taxes for 2022.

Child and Dependent Care Tax Credit (CDCTC)

Alabama does not currently offer a state-level CDCTC.

Notes:

• In 2024, Gov. Kay Ivey signed House Bill 358 as part of the “Working for Alabama” legislative package, introducing a new child care tax credit.³ The tax credit has three components: (1) Employer Tax Credit⁴, which is a tax incentive to Alabama employers who provide support to employees for their childcare needs; (2) Childcare Facility Tax Credit for childcare providers who operate a qualified service facility⁵, and; (3) the nonprofit childcare provider grant that allows nonprofit childcare programs apply for funding to strengthen facility operations.