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The Alabama Business Tax law is found in Chapter 14A, Title 40, Code of Alabama 1975 . The Alabama Business Privilege Tax is levied for the privilege of being organized under the laws of Alabama or doing business in Alabama (if organized under the laws of another state or country). The Business Privilege Tax is levied on a taxpayer’s net-worth apportioned to Alabama. With the exception of the Business Privilege return for Financial Institutions Groups, the Business Privilege tax return due date conforms to the due date of the corresponding federal return.
Business Privilege Tax RateThe tax rate for business privilege tax is graduated, based on the entity’s federal taxable income apportioned to Alabama. The rates range from $0.25 to $1.75 for each $1,000 of net worth in Alabama. The minimum business privilege tax is $100. |
Business Privilege Tax CapThe 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
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Business Privilege Tax Enterprise Zone Credit or ExemptionThis 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. Please click here for further information. |
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