For certified Alabama firefighters, Alabama allows a full deduction for qualifying cancer insurance premiums paid by eligible firefighters, effective beginning with tax year 2020 under Act 2019-361. The provision applies only to premiums paid for cancer insurance coverage that meets the statutory definition under the Act and Alabama Department of Revenue instructions. The deduction is claimed on Alabama Form 40 (resident return) and Form 40NR (nonresident return), but the treatment differs between resident and nonresident filings..
Eligibility and Deduction Rules
- Certified Firefighters Only: The deduction is limited to individuals who are officially certified as firefighters under Alabama law or by the appropriate Alabama fire authority, as required by Act 2019-361 and implementing administrative guidance.
- 100% Deduction (Qualifying Premiums Only): A deduction is allowed for the full amount of premiums paid by the eligible firefighter for qualifying cancer insurance coverage as defined under Act 2019-361. The deduction does not extend to non-qualifying policies, unrelated supplemental coverage, or premiums not directly attributable to the eligible individual.
- Form 40 (Resident): For Alabama residents filing Form 40, the deduction is taken as a statutory adjustment/deduction on the Alabama return in the specific line designated for “Certified Firefighter Insurance Premiums” as listed in the official Form 40 instructions for the applicable tax year. It is not treated as a federal Schedule A itemized deduction, but rather as an Alabama-specific subtraction from income as defined by the return instructions.
- Form 40NR (Nonresident): For nonresidents filing Form 40NR, the deduction is allowed as an Alabama-adjusted deduction subject to Alabama-source allocation. The deductible amount must be reduced by the ratio of Alabama-source income to total income (or the applicable Alabama apportionment factor as defined in the Form 40NR instructions for the tax year). The deduction is claimed on the designated line for “Certified Firefighter Health Insurance Premiums” or equivalent line title in the Form 40NR instructions for that tax year, subject to proration rules.
Source:
Form 40,
Form 40NR
Disclaimer: Always verify details with the most current Alabama Department of Revenue forms and instructions. Tax rules may change annually. For complex situations, consult a CPA or tax professional.