Flag_of_Alabama.svg
An official website of the Alabama State government.
Here's how you know

The .gov means it's official

Government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on an official government site.

The site is secure

The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Procedures for Employer Tax Credit

Tax Incentives >
  • Procedures for Employer Tax Credit
More In Tax Incentives
Childcare Facility Tax Credit
Employer Tax Credit
Procedures for Childcare Facility Tax Credit
Procedures for Claiming the Coal Tax Credit
Coal Credit
Volunteer Emergency Responders Tax Credit
Volunteer Emergency Responders Tax Credit Claiming Procedures
Income Tax Incentives
Railroad Modernization Act Credit Claiming Procedures
Procedures for Reserving an Innovating Alabama Credit
Back To Tax Incentives Home

The Employer Tax Credit must be precertified through My Alabama Taxes before an employer can claim the credit on their Alabama tax return. Precertification of this credit is a two-step process requiring taxpayers to first secure a credit reservation. Eligible employers may begin requesting reservations on March 1. Those with an approved reservation must then submit a credit claim at the end of the tax year and include detailed documentation substantiating their claims.

Prerequisites for submitting an Employer Tax Credit reservation through My Alabama Taxes:

  • Taxpayer must be a qualifying employer who anticipates incurring eligible expenses throughout the year. Eligibility requirements can be found here.

Procedures for filing an online Employer Tax Credit Reservation through My Alabama Taxes:

  • Visit My Alabama Taxes and enter your credentials to login.
  • Once logged in, click on the Other Actions tab and select Reserve an Employer Tax Credit under Tax Incentives.
  • Employer Information: Complete the required fields and select Next.
    • Note! If you make a rural or small business designation and you do not meet these criteria, your reservation request will be rejected, requiring a new submission. A map of qualifying rural (targeted) counties can be found here.
  • Reservation Amount: Enter the amount of credit you wish to reserve and select Next.
    • Small Businesses (fewer than 25 employees): Eligible for a credit equal to 100 percent of eligible expenses, with a maximum of $600,000 annually.
    • Other Employers (25 or more employees): Eligible for a credit equal to 75 percent of eligible expenses, with a maximum of $600,000 annually.
  • Review Submission: Please review the information in full (and print a copy of your records). Once reviewed, select Submit.

What to expect after the reservation is submitted:

Once your reservation is processed, you will receive a letter from ALDOR notifying you of the amount of reservation approved.  At the close of the tax year, taxpayers with an approved reservation will be required to submit documentation to support the reserved amount through a credit claim.

The credit awarded may be up to, but not exceeding, the reserved amount. Detailed instructions on how to submit a credit claim will be available by December 1, 2025. Should you have any questions or concerns, please contact incentives@revenue.alabama.gov or 334-353-9789.