Gov. Bob Riley and house budget committee chairman John Knight say they are trying to reach an agreement on an income tax cut and both men are optimistic.
Currently, Alabama requires a family of 4 to start paying state income tax on earnings of $4,600 a year.
Alabama is the only state with an income tax threshold for a family of four below $10,000.
Riley has proposed raising that threshold over 5-years to $15,000 by increasing the standard deduction and personal and dependent exemptions.
Riley's plan would give every taxpayer a tax cut and would cost $233 million a year.
Knight's plan would increase the threshold for a family of four to $22,800 in 2007.