Tax Incentives

Alabama is a pro-business state, offering competitive tax incentives to help businesses thrive within the state. Tax abatements and incentives are available to qualifying businesses that are expanding or locating to Alabama. Additional information about Alabama tax rates and incentives can be found at the Alabama Department of Commerce website.

• Corporate Income Tax Incentives

  Alabama’s corporate income tax rate is 6.5% and is based on a company’s net taxable income in Alabama. In addition to deductions for qualifying pollution control equipment, companies in Alabama can deduct the full amount of federal income taxes apportioned to Alabama.

  Other incentives include:

  • Net Operating Loss Carryforward – Includes a 15-year carryforward of net operating losses
  • Basic Skills Educational Tax Credit – A tax credit of 20% of the cost of qualifying employee education programs

• Business Privilege Tax Incentives

  The business privilege tax is based upon a company’s ability to pay and determined by the company’s federal tax income in Alabama. Companies who have invested in certain types of pollution control equipment or aircraft equipment may qualify for deductions to their business privilege tax responsibility.

• Property Tax Incentives

  Property tax incentives include deductions for certain types of pollution control equipment, as well as exemptions for qualifying raw materials and finished goods inventory. Alabama does not levy property taxes on inventory (unless used for lease or rental purposes).

• Sales and Use Tax Incentives

  Alabama’s sales and use tax statues contain many advantages for businesses, including exemptions for specific organizations and commodities.

  Common exemptions include:

  • Gasoline
  • Fertilizer and Insecticides (When Used for Agricultural Purposes)
  • Feed for Livestock
  • Wholesale Sales
  • Sales to Government Entities

  Incentives include:

  • Exemption for Raw Materials
  • Sales and Use Tax Reciprocity
  • Pollution Control Equipment
  • Exemption for Quality Control Testing and Donations to Charitable Entities
  • Utility Gross Receipts Tax Exclusions
  • Exclusion for Poultry Houses

• Property and Sales Tax Abatements

  Abatements for non-educational property and sales and use taxes are available for qualifying companies from Marshall County and individual cities located within the county. For information about local tax abatements, contact the Marshall County Economic Development Council staff at 256-582-5100.