The Alabama Department of Revenue has finalized three income tax regulations collectively referred to as the "gross income tax" regulation. Under this rule, Alabama residents must include their distributable share of passthrough income from both in-state and out-of-state partnership, LLC, and S corporations activities in their gross income.

The change is effective for the 2011 tax year. Prior to the change, resident taxpayers could apportion income from these entities and exclude non-Alabama source income. The regulations were revised to conform to changes in the Alabama law addressing gross income. For more information, see the DOR Information Release.