The business
privilege tax is an annual tax paid by corporations and limited liability entities
(including disregarded entities) for the privilege of conducting business in
Alabama. The tax base is the taxpayer's net worth apportioned to Alabama.
For business entities new to Alabama, the tax accrues as of the date of
organization, qualification, or beginning to do business, and is due 30 days
thereafter. The tax for existing entities accrues as of January 1 of
every taxable year, and is due March 15.
Business
Privilege Tax Rate
The tax rate
for business privilege tax is graduated, based on the entity's federal taxable
income apportioned to Alabama. The rates range from $.25 to $1.75 for each
$1,000 of net worth in Alabama. The minimum tax is $100.
Business
Privilege Tax Cap
The maximum
business privilege tax for most business entities is $15,000. The exceptions
are for financial institutions, financial institution groups, and insurance companies
that have a maximum business privilege tax of $3,000,000.
Business
Privilege Tax Deductions
Pollution
Control Equipment
- An entity can deduct from their Alabama net worth the net amount invested in
all devices, facilities, or structures, and all identifiable components or materials
for use therein, that are located in Alabama and are acquired or constructed primarily
for the control, reduction, or elimination of air, ground, or water pollution
or radiological hazards where such pollution or radiological hazards result from
or would be caused by the taxpayer's activities in Alabama.
Air Carrier Hub Operation Equipment - An entity can
deduct from their Alabama net worth the net amount invested by the taxpayer in
all real and tangible personal property, equipment, facilities, structures, and
components including, but not limited to, all aircraft replacement parts, components,
systems, supplies, and sundries affixed or used on an aircraft, and ground support
equipment and vehicles used by or for the aircraft, when used by certified or
licensed air carrier with a hub operation within this state, for use in conducting
intrastate, interstate, or foreign commerce for transporting people or property
by air.
Business
Privilege Tax Enterprise Zone Credit or Exemption
This
credit or exemption is offered to help encourage economic growth in areas considered
to have depressed economies (see Sections 41-23-24 and 41-23-30, Code of Alabama
1975 ). To qualify for this incentive, a business must meet detailed requirements
concerning site location and employee qualifications.
For information please contact:
Alabama Department of Economic and Community Affairs
Enterprise Zone Coordinator
401 Adams Avenue
P.O. Box 5690
Montgomery, AL 36103-5690
334-242-5438