Exactly. She paid income tax and did not receive any money in her pocket because she still had “income”.
@TheOriginalCane can do a much better job of explaining the definition of income than I can, but whether we receive money or goods/services, we are receiving income and we are taxed on it. Even a scholarship that covers tuition is technically income in that the student or family does not have to spend their own money for tuition. The term my federal income tax professor used was any “accession to wealth” is income.
I would have no problem with Alabama deciding it does not want to collect state income tax from everyone, but to exempt NIL money while making everyone else in the state pay income tax can only happen in a “special” place. The kind of “special” that rides the short bus to school. Which begs the question, can an entire state ride a short bus?