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Assistance & Resources

Doing Business 

BUSINESS ADVANTAGES 

  • Progressive Governmental Leadership
  • Highly Skilled and Motivated Workforce
  • Alabama is a Right-to-Work State
  • Property Tax Abatements on Equipment and Real Estate for up to 15 years
  • Sales and Use Tax Abatements for Equipment and Construction Materials Purchases
  • The Lowest Property Taxes in the Nation
  • No Inventory Taxes
  • No Impact Fees
  • Master Planned Industrial Parks
  • Customized Incentive Packages for New Businesses

 

ECONOMIC DEVELOPMENT RESOURCES 

The following entities can provide economic development information for the state of Alabama.

 

Tax Incentives

 

INCOME TAXES 

 

  • Corporations’ income tax based on net taxable income derived only from business conducted within the state determined by applying a four-factor formula of property, payroll, and double-weighted sales to total net income.
  • Corporate income tax rate of 6.5 percent (individuals taxed at a rate of 5 percent).
  • Full deduction for all federal income taxes apportioned to Alabama creating a significantly reduced net effective rate.
  • 15 year carry forward of net operating loss

 

PROPERTY TAX 

 

  • Constitutional limit of the state mileage rate on both real and personal property to 6.5 mills, of which 3 mills are dedicated to education.
  • Business property, both real and personal, taxed on 20 percent of fair market value.
  • Inventories and goods-in-process are not taxed. Pollution control equipment statutorily exempt from property taxation.
  • Exemption of all tangible personal property being warehoused in Alabama for shipment to a destination outside the state.

 

BUSINESS PRIVILEGE TAX 

 

  • Replaces the former franchise tax.
  • Capped at $15,000 except for financial institutions and insurance companies.

 

Alabama Reinvestments & Abatement ACTS

 

 

 

NEW FACILITIES & EXPANSION 

  • Abatement of a non-educational portion of sales and use taxes on construction materials.
  • Abatement of a non-educational portion of property tax for up to 20 years.
  • Existing Facility: Refurbishments, Upgrades or Placed Back in Service:
  • Abatement of non-educational sales and use taxes on construction materials and equipment.
  • Abatement of non-educational property taxes for up to 20 years of the incremental property tax increases.
  • Exemption from taxes for increased utility services for up to 10 years.

 

AIDT WORKER TRAINING 

  • Consistently one of the top three statewide workforce training agencies in the U.S., Alabama Industrial Development Training is an innovative training program that provides value-added solutions for Alabama’s new and expanding industries. Services are offered at no cost to qualifying companies.
  • Services include:
    • Pre-employment Training
    • Post-employment Training
    • Maintenance Assessments
    • Safety & Assistance Training
    • Leadership Development
    • Process Improvement
    • EMPACT
    • ExTra
    • Comprehensive Training
    • Employee Recruitment

 

Sales & Use Tax

 

 

FOUR STATE RATE DIFFERENTIALS, WHICH INCLUDE: 

 

  • 1.5% rate for manufacturing and farm machinery.
  • 2% rate for automotive vehicles.
  • 3% rate for food sold through vending machines.
  • 4% general rate for all other items.

 

ADDITIONAL CREDITS AND EXEMPTIONS: 

 

  • Raw materials used by manufacturers or compounders specifically exempt from sales and use taxation
    • Pollution control equipment statutorily exempt from taxation
  • Credit for sales and use tax paid to another state and its subdivisions.
  • Exemption for quality control testing and donations to charitable entities.
  • Abatements by cities, counties, and public authorities may include:
    • For qualifying industries, all state and the local non-educational portion of the construction-related transaction (sales and use) taxes associated with construction and equipping a project.
    • For coal mining projects, half of the state sales and use tax may be abated.
  • Utility gross receipts tax exemptions for:
    • Sewer costs
    • Water used in industrial manufacturing in which 50 percent or more is used in industrial processing
    • Exclusions for utility services used in certain types of manufacturing and compounding processes
    • An electrolytic or electrothermal manufacturing or compounding process
    • Natural gas becomes a component of tangible personal property manufactured or compounded, but not used as fuel or energy
    • Natural gas used to chemically convert raw materials prior to the use of such converted raw materials in electrolytic or electrothermal manufacturing or compounding process
    • Increased utility tax for refurbishment, upgrades, or reopening of a facility