Section 41-23-20 through Section 41-23-32, Code of Alabama 1975
The Alabama Enterprise Zone Program provides certain tax incentives to corporations, partnerships, and proprietorships that locate or expand within designated Enterprise Zones. In addition to state-level tax incentives, businesses may also receive local tax and non-tax incentives for locating or expanding within a designated Enterprise Zone.
The qualifying Enterprise Zones have been updated pursuant to the Alabama Incentives Modernization Act, Act 2019-392, to include any targeted or jumpstart county.
Section 5 of the Alabama Enterprise Zone Program offers the following tax incentives:
Maximum credit of up to $2,500 per new permanent employee and is calculated using one or more of the following:
- Five-year incentive
- Thirty percent of the company’s new permanent employees if they were unemployed 90 days or longer prior to the employment.
- Credit is taken in increments: Yr. 1 = 80%, Yr. 2 = 60%, Yr. 3 = 40%, Yrs. 4 and 5 = 20%.
- Capital Investment
- Ten percent of the first $10,000
- Five percent of the next $90,000
- Two percent of the remaining investment
- Training
- Company may claim a credit of up to $1,000 for training new permanent employees in new skill areas.
Credits are to be used in the year earned with any remainder available to be applied against income or business privilege tax liabilities for the succeeding two years.
Section 11 of the Alabama Enterprise Zone Program offers exemptions (subject to approval by the advisory council and the governor of Alabama) from the following:
- Sales and Use Tax on purchases of construction related materials, machinery and equipment used in the zone for five years;
- Income Tax for five years; or
- Business Privilege Tax for five years.
The Alabama Department of Economic and Community Affairs is the administering agency for this incentive. All inquiries regarding the qualifications should be addressed to ADECA’s Enterprise Zone Coordinator.
Please contact the Office of Economic Development for instructions on how to claim the Enterprise Credit and Exemption(s).