The Details
Alabama has enacted legislation creating a tax credit for employers that provide paid time off for organ donation. The tax credit will be in effect for tax years 2027 through 2031.
The tax credit will equal 25% of the amount of gross compensation paid to the employee during the leave for organ donation (up to 30 days) and will be credited to the employer’s state income tax liability. The total tax credit is limited to $2,000 for a tax year.
If, after the employer’s approval of the leave, there is a medical determination that the individual doesn’t qualify as an organ donor, the tax credit will be limited to the amount of gross compensation paid to the employee from the beginning of the leave period through the day of the medical determination.
Eligibility
To be eligible for the tax credit, employers must adopt a written policy that allows individuals to take paid leave for at least 15 days for organ donation. The 15 days of leave must be available to employees without any reduction in pay, or loss of vacation time, personal days, or sick leave.
The leave policy must also require that employees provide signed authorization for the medical provider to confirm their organ donation, in compliance with the Health Insurance Portability and Accountability Act of 1996.
For the purposes of the tax credit, the leave policy may apply only to employees for whom the employer is responsible for providing a Form W-2 (Wage and Tax Statement).
Next Steps
Employers that intend to claim the tax credit should: