Act 2008-377 was passed in the 2008 Regular Session of the Alabama Legislature. This bill amended Section 40-18-15 Code of Alabama, 1975 by adding a new deduction to for state income taxpayers.

Generally, the law now allows up to $5000 per annum contributed subsequent to 12/31/07 to either the Ala. Prepaid Affordable College Tuition Plan (PACT) or the Ala. College Education Savings  (ACES) Program as defined in Title 16 Chapter 33C (Ala. 529 plan) Code of Ala. 1975.

Any early, nonqualified, withdrawals (as defined in the 26 USC 529 of the IRC) shall be added back to the income in the year withdrawn plus 10%
(penalty) of the withdrawn amount.

I would appreciate your distributing this e-mail to your network. I think it is important for the tax advisors around Alabama to make sure they know of this new law which could save their client taxpayers money on their 2008 individual returns if they make contributions before year end.