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 two and one-half thereafter. The tax for existing entities accrues as of January 1 of every taxable year and is due by the unextended due date of the entity’s corresponding federal return.
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.
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.
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.
Stephanie Rankins, Enterprise Zone Coordinator
401 Adams Avenue
P.O. Box 5690
Montgomery, AL 36103-5690
P: (334) 242-5384
ADECA’s Enterprise Zone Program
Learn more about Business Privilege Tax