On February 22, 2026, the state of Alabama made significant changes to its tax laws with the passing of a comprehensive tax reform package. The aim of the reform is to simplify the state's tax code, make it more competitive with neighboring states, and ultimately boost state revenue.One of the most notable changes in the package is a reduction in the state's individual income tax rates. The top income tax rate has been lowered from 5% to 4.5%, while the bottom rate has been reduced from 2% to 1.5%. These changes are expected to provide relief for low and middle-income earners while still ensuring a steady stream of revenue for the state.In addition to the income tax cuts, the reform package includes a number of other changes. For example, the state's corporate income tax rate has been lowered from 6.5% to 6%, making Alabama more attractive to businesses looking to locate or expand in the state. The package also includes provisions to simplify and streamline the process for filing taxes, which is expected to save both time and money for taxpayers.Another key aspect of the reform is the elimination of certain tax credits and deductions that were deemed ineffective or outdated. By getting rid of these provisions, the state hopes to generate additional revenue that can be put towards essential services and infrastructure projects.Overall, the tax reform package is being met with mixed reactions. Supporters argue that the changes will make Alabama more competitive economically and attract new businesses and residents to the state. Critics, however, express concern that the cuts to income tax rates could result in a loss of revenue for critical state services.Governor John Smith, who championed the tax reform package, expressed confidence in the changes, stating that they are necessary to ensure Alabama's long-term economic health. He also emphasized that the state will closely monitor the impact of the changes and make adjustments as needed to safeguard the well-being of all Alabamians.