A private sector employer may claim an Alabama income tax credit for paid organ-donation leave if it adopts the required written leave policy and meets the listed conditions.
(a) In recognition that it is the policy of the State of Alabama to encourage organ donation to individuals in dire medical need, as set forth in Section 22-19-71.1, the tax credit provided in this section is intended by the Legislature to foster employment conditions that encourage organ donation. (b) For purposes of this section, the following terms have the following meanings: (1) MINIMUM LEAVE PERIOD. Fifteen days. (2) TAXPAYER. A private sector employer. (c) Effective for tax years beginning January 1, 2027, and ending December 31, 2031, a taxpayer shall be entitled to a state income tax credit for providing paid leave to employees for the purpose of making an organ donation subject to all of the following requirements: (1) The taxpayer must adopt a formal, written policy that allows an employee to take a paid leave of absence of no less than the minimum leave period to undergo a medical procedure to donate all or part of an organ to another individual. (2) The leave policy must be available without any reduction in pay or loss of vacation time, compensatory time, personal days, or sick leave for no less than the minimum leave period. (3) The leave policy may apply only to an employee for whom the taxpayer is responsible for providing an IRS Form W-2 Wage and Tax Statement. (4) The leave policy shall require the employee to provide signed authorization to disclose to the taxpayer and the Department of Revenue documentation from the employee’s medical provider which verifies the organ donation, in compliance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA), 42 U.S.C. § 1320d et seq. (5) The tax credit amount shall be equal to 25 percent of the amount of gross compensation paid to the worker for the period of leave taken, up to 30 days, credited to the taxpayer’s state income tax liability. (6) The total amount that may be credited to the taxpayer’s state income tax liability for a tax year is two thousand dollars ($2,000). (7) If there is a medical determination after the taxpayer’s approval of the leave of absence that the employee does not qualify as an organ donor, the amount of the tax credit shall be limited to the amount of gross compensation paid to the worker from the beginning of the leave period through the day of the medical determination. (8) If the amount of the credit exceeds the tax liability for the year, the excess may be carried forward and applied to the tax liability for up to the three succeeding tax years. (9) A taxpayer may not sell or transfer any tax credit that the taxpayer is eligible to claim under this section. (d) The Department of Revenue shall adopt rules, forms, and worksheets for the implementation of this section