Incentives

Various tax incentives are available for new and expanding companies within Fayette, Lamar, and Marion Counties. Below is a summary of statewide tax incentives and rates. Further information can be found on the Incentives Summary located on the Alabama Department of Revenue website.

In addition - local incentives are available, based on various investment, job creation, business type and location factors. For assistance in determining tax rates and accessing available incentives, contact the C3 of Northwest Alabama Economic Development Alliance at 205-468-3213.

Click the tabs below to learn more about each incentive

Corporate Income Taxes

The Alabama corporate income tax rate is 6.5% and is based on the net taxable income of business done in Alabama. Businesses are allowed to deduct ALL of its federal taxes apportioned to Alabama.

Deductions / Abatements:

  • Net Operating Loss Carryforward
  • Pollution Control Equipment
  • Income Tax Capital Credit (see below)
  • Basic Skills Educational Tax Credit

Capital Credit

This incentive is available to qualifying new and expanding companies. It gives businesses up to 5% credit of capital costs, which can be applied to the Alabama income liability generated by the project income. It is available every year for up to 20 years. For more information, see the Capital Credit Information section on the ADOR website.

Favored Geographic Areas

All three counties are designated as Favored Geographical Areas, which allows qualifying new and expanding companies to qualify for the capital credit incentive at lower investment and new employee thresholds. For more information, visit http://www.madeinalabama.com/assets/2013/01/2013-ALABAMA-TAXES-AND-INCENTIVES-SUMMARY.pdf

Business Privilege Tax

This tax is based on a company's net worth in Alabama and the company's ability to pay. The rate ranges from $.25 to $1.75 for each $1,000 of net worth in Alabama.

Deductions / Abatements:

  • Pollution Control Equipment
  • Air Carrier with Hub Operations

Property Tax

The state property tax rate is 6.5. County and city rates vary and current rate information can be found in the Property Tax Section of the ADOR website.

Deductions / Abatements:

  • Abatements for Noneducational Property Taxes
  • Pollution Control Equipment
  • Inventory:
    • No property taxes on inventory, which adds to the advantages of the C3 region for warehousing/distribution center operations
    • Exemptions available for raw materials inventory

Sales and Use Tax

The state sales and use tax rates are 2.5% and sales and use tax rates on machinery are 1.0%. County rates vary and current rate information can be found in the City and County Tax Rates Section of the ADOR website.

Deductions / Abatements:

  • Abatement of State and Noneducational Local Construction-Related Taxes
  • Exemptions for raw materials, pollution control equipment, quality control testing, and donations to charitable entities.
  • Utility Gross Receipts Tax Exclusions
  • Discount if Sales Tax is Paid on Time

State Unemployment Tax

Employer requirement for the state unemployment tax is based on the first $8,000 of each employee's compensation and rates vary from 0.5% to 5.4%. The new employer rate is 2.7% and then rates are based on employer's experience rating. Employees do not contribute.