2023 Code of Alabama
Title 41 - State Government.
Chapter 23 - Department of Economic and Community Affairs.
Article 2 - Alabama Enterprise Zone Act.
Section 41-23-24 - Tax Incentives; Adoption of Rules to Implement Tax Credits and Incentives; Maximum Tax Credit per New Permanent Employee; Application of Tax Credits; Tax Credits Are in Addition to Exemptions and Credits Under Chapter 18 of Title 40; No Credits for Taxes to Other States.

Universal Citation: AL Code § 41-23-24 (2023)

Section 41-23-24

Tax incentives; adoption of rules to implement tax credits and incentives; maximum tax credit per new permanent employee; application of tax credits; tax credits are in addition to exemptions and credits under Chapter 18 of Title 40; no credits for taxes to other states.

(a) Any provisions of Title 40, Chapter 18, notwithstanding, and specifically any provisions of Sections 40-18-22, 40-18-35, 40-18-35.1, 40-18-37 and 40-18-38, to the contrary notwithstanding, the following tax incentives may be available to any business, industry or manufacturer who complies with the provisions of this article:

(1) INCOME TAX CREDIT. There may be a five-year credit of varying proportions of taxes due from zone operations: first year, 80 percent; second year, 60 percent; third year, 40 percent; fourth and fifth years, 20 percent. This credit is available for corporations, partnerships, and proprietorships provided that 30 percent of the new permanent employees were formerly unemployed for at least 90 days prior to this employment.

(2) CREDIT FOR EXPENSES OF TRAINING NEW EMPLOYEES. There may be a tax credit for the expenses of training new employees in new skills. The maximum credit shall be $1,000.00 per employee.

(3) CREDIT FOR NEW INVESTMENTS. There may be a credit for new investments within the state in the following amounts: 10 percent on first $10,000.00 invested, five percent on next $90,000.00 invested, and two percent on remaining investment. This credit is also available for improvements to existing facilities, provided at least five new permanent employees are hired.

(4) LOCAL TAXES. A reduction of permit fees, user fees and business, professional and occupational license taxes may be permitted by the local governments. This incentive is optional and shall be stated when the area applies for zone designation.

(b) The Commissioner of the Department of Revenue shall formulate, promulgate, issue and enforce any reasonable and necessary rules to implement any state tax credits or incentives.

(c) It is expressly provided that any tax credit, pursuant to this section, shall not total in excess of $2,500.00 per new permanent employee hired pursuant to this article. This tax credit may be applied in all enterprise zones to any state income tax liability or any state business privilege tax liability and shall be used for the taxable year in which the increase in average annual employment occurred to the maximum allowed. However, if the entire credit cannot be used in the year earned, the remainder may be applied against the income tax or state business privilege tax for the succeeding two years or until the entire credit is used, whichever occurs first.

(d) All tax credits herein prescribed may be in addition to any exemptions and credits authorized in Title 40, Chapter 18.

(e) No tax credits for tax incentives shall be authorized for any credit for taxes, fees or funds to other states or territories.

(Acts 1987, No. 87-573, p. 897, §5.)

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