(a) An individual taxpayer is allowed a deduction against income earned for state income tax purposes imposed pursuant to Section 40-18-5, for amounts contributed to a catastrophe savings account in accordance with subsection (c) and all interest income earned by a catastrophe savings account is exempt from the tax imposed pursuant to Section 40-18-5.
Terms Used In Alabama Code 40-18-311
Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
Garnishment: Generally, garnishment is a court proceeding in which a creditor asks a court to order a third party who owes money to the debtor or otherwise holds assets belonging to the debtor to turn over to the creditor any of the debtor
state: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Alabama Code 1-1-1
year: means a calendar year; but, whenever the word "year" is used in reference to any appropriations for the payment of money out of the treasury, it shall mean fiscal year. See Alabama Code 1-1-1
(b) A catastrophe savings account is not subject to attachment, levy, garnishment, or legal process in this state.(c) The total amount that may be contributed to a catastrophe savings account must not exceed any of the following:
(1) In the case of an individual whose qualified deductible is less than or equal to one thousand dollars ($1,000), two thousand dollars ($2,000).(2) In the case of an individual whose qualified deductible is greater than one thousand dollars ($1,000), the amount equal to the lesser of fifteen thousand dollars ($15,000) or twice the amount of the taxpayer’s qualified deductible.(3) In the case of a self-insured individual who chooses not to obtain insurance on his or her legal residence, two hundred fifty thousand dollars ($250,000), but in no event may the amount contributed exceed the value of the individual taxpayer’s legal residence.(d) If a taxpayer contributes in excess of the limits provided in subsection (c), the taxpayer shall withdraw the amount of the excess contributions and include that amount in Alabama income for purposes of Section 40-18-5 in the year of withdrawal.
