Competitive Taxes And Incentives
Alabama offers businesses an attractive taxation environment and one of the nation’s lowest overall tax burdens. In addition, Alabama provides a number of tax incentives designed to assist with a cost-effective start-up and provide continued operational savings.
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Property Taxes:
Alabama property taxes are among the lowest in the United States. Taxes are calculated using your property's assessed value. This is determined by multiplying the appraised value by the corresponding property classification, which is also known as the assessment rate. Business property is assessed at 20%. Once the assessed value of your property has been determined, multiply it by the appropriate millage rate for the area in which your project will be located.
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A mill is one-tenth of one cent. (.001)
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1 mill=$0.001
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Assessed Value X Millage Rate=Unadjusted Tax Bill
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Income Taxes:
Alabama's maximum corporate income tax rate is 6.5%; federal income taxes are deductible, reducing the effective rate to approximately 4.3%. Investments in pollution control equipment also are deductible in computing Alabama income. There are no minimum state income tax requirements. Net operating loss carry-forwards are permitted. The maximum state income tax on an individual is 5%; federal income taxes paid are deductible in computing individual gross income. There are no occupational taxes in Walker County.
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Business Privilege Tax:
The Alabama Business Privilege Tax is assessed on corporations and limited liability entities, and is calculated on net worth, an apportionment factor and a company’s federal taxable income in the state. The rate ranges from $0.25 to $1.75 per $1,000 of net worth. The minimum tax is $100, the maximum tax on manufacturers is $15,000.
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Sales and Use Taxes:
The State of Alabama, Walker County and local municipalities assess sales taxes on the purchase of construction materials, furnishings and fixtures, as well as use taxes on the purchase of machinery and equipment.
Pollution control equipment is exempt from tax.
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Alabama Jobs Act:
Investment Credit & Jobs Credit
Investment Credit:
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Annual credits for up to 1.5 percent of capital invested
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Available for up to 10 years, with up to five years of carry forward
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The first three years may be transferred
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Credits may offset income; utility gross receipts; and insurance and bank taxes, including taxes owed by existing operations
These credits can apply to projects involving the following sectors regardless of the number of jobs: tech, chemical manufacturing, research, engineering and design, data centers, and metal/machining technology or toolmaking.
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Jobs Credit:
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Annual cash payments of up to three percent of last year’s payroll for new employees
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Available for up to 10 years
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Amounts are paid as refunds of taxes for utility services; not dependent on utility taxes actually owed or paid
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TAX ABATEMENTS
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Sales and property tax abatements are available to qualifying new industrial or commercial projects and expansions of such projects assuming their capital costs meet the lesser of either 30 percent of the original cost of existing industrial property or $2 million
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City, county and state non-educational sales and use tax abatements are available on construction materials and manufacturing machinery
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Non-educational property taxes may be abated for up to 20 years
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Non-educational property tax abatements for years 11 through 20 require the consent of each governing authority (city, county and state) to abate its respective portion.
Alabama Industrial Development Training (AIDT)
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Hailed as one of the nation’s most effective state-sponsored workforce training programs, Alabama Industrial Development Training, or AIDT, has provided state-of-the-art industrial training to thousands of workers of Alabama industries. AIDT’s services are cost-free for qualifying new and expanding industries in Alabama. AIDT was awarded ISO 9001:2015 certification by the International Organization for Standardization
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TAXES & INCENTIVES
