State Enacts Reemployment Benefits For Employers

Under a bill passed by the Alabama Legislature and signed by Governor Riley on April 22, 2010 (The Reemployment Act of 2010, or TRA2010), Alabama employers will be entitled to a deduction of up to 50% of wages paid to previously unemployed workers. The deduction under new AL 40-18-271 will be allowable in either 2011 or 2012, after the previously unemployed worker has worked as a full-time employee (at least 37.5 hours per week ) for 12 consecutive months. In order to qualify, at the time the new worker is hired, he or she must have either

  • Been drawing unemployment benefits, or
  • Had his or her unemployment benefits expire.

The deduction is reported on the employer's income tax return for the year in which the employee has worked his or her 12th consecutive month of full-time employment . In the case of wages paid by an employer that is a partnership, an LLC, or an S corporation, the deduction will be passed through to the partners, members, or shareholders on a pro rata basis. The deduction under TRA2010 is in addition to the usual deduction the employer would take for 100% of the employee's wages and other benefits provided.

The amount of the deduction is based on the hourly wage of the employee:

Employee Hourly WagePercentage of Wages Allowed As A Deduction
$14 and above50%
$12.00 and $13.9940%
$10.00 and $11.9935%
Less than $10.00No deduction

The Alabama Department of Revenue has not yet issued regulations under the new law, but for additional details, you can see ADOR's Frequently Asked Questions about TRA2010.

This page last updated 9/24/10

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