Investment Credit

Section 40-18-376 provides for a discretionary credit depending upon the qualifications of the approved company’s capital investment and the requirements set forth in §40-18-371. Only taxpayers that have been approved by the Alabama Department of Commerce for qualifying projects are eligible to claim the credit as provided in the executed State Project Agreement. Once the Alabama Department of Commerce certifies the annual Investment Credit, an allocation must be made via My Alabama Taxes (MAT). Please see the bottom of this page for further details on submitting an investment credit allocation schedule through MAT.

For more information regarding eligibility, qualifications, and procedures for a new or expanding project, please contact Ted Clem, Director of Recruitment and Retention at ted.clem@commerce.alabama.gov or 334-242-0400. For additional information on the Investment Credit, please click here.

Provisions of the Investment Credit include:

• Tax credit of up to 1.5% annually of qualified capital investment for a qualified project, for a period of up to 10 years*
• The tax credit can be utilized against:
  • Income taxes, including estimated taxes;
  • Financial institution excise tax;
  • Insurance premiums tax;
  • Utility taxes paid;
  • Utility license tax (for utility companies only); or
  • A combination of the above taxes for a period of 10 years.
• The annual credit is not refundable, but any unused credit associated with the annual credit can be carried forward for up to 5 years.
• If provided for in the State project Agreement, the first 3 years of the Investment Credit may be transferred to another taxpayer for at least 85% of its face value.

*For qualifying investments in a targeted or a jumpstart county or certain underrepresented companies, the incentive period is available for up to 15 years (Act 2021-2).