Act 2024-302 provides a one-time annual credit of up to $2M per project for up to 10 years that will be awarded to qualified taxpayers that have a qualified workforce housing project. The Alabama Housing Finance Authority (AHFA) is the administering agency for determining the qualifying projects. For inquiries regarding eligibility and qualifications for the tax credit, please contact ahfa.au.audit@ahfa.com or (334) 244-9200.
Provisions of the Alabama Workforce Housing Tax Credit:
- The tax credit is available for qualified workforce housing projects, which include the construction, rehabilitation, or both, of multifamily housing units located in Alabama for tax years beginning on or after January 1, 2025.
- To qualify for the Alabama Workforce Housing Tax Credit, the project owner must first qualify as a federal low-income housing project and receive an eligibility certificate from the Alabama Housing Finance Authority (AHFA). This certificate will specify the annual credit amount and the award period, which can extend up to 10 years.
- A qualified taxpayer is eligible to receive the tax credit up to $2M per project that be applied against:
- Income taxes;
- State portion of the Financial Institution Excise Tax; or
- Insurance premiums tax.
- Pass through entities may allocate the credit to some or all its partners, members or shareholders.
- The credit becomes effective for tax years beginning January 1, 2025, and will remain in effect until September 30, 2027, unless extended by the Legislature.
Additional provisions include:
- The credit can be claimed each year of the credit award period.
- The credit is non-refundable and cannot be transferred but any unused credit can be carried forward up to 5 years.
- The project owner will receive a letter from the Alabama Department of Revenue outlining the steps to claim the credit, or for pass-through entities, allocate the credit to qualified taxpayers.
- Qualified taxpayers who receive the credit through a pass-through entity must allocate the credit to the appropriate tax type through My Alabama Taxes before filing their tax return.