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Chapter 9B Abatements

About the Tax Incentive Reform Act of 1992 Chapter 9B Abatements For New and Expanding Projects, Including Upgrades

The Tax Incentive Reform Act of 1992 (Chapter 9B, Title 40, Code of Alabama 1975) gives cities, counties, and public industrial authorities the ability to abate the following for new and expanding qualifying projects:

  • State sales and use taxes
  • Non-educational county and city sales and use taxes
  • Non-educational state, county, and city property taxes – up to 20 years (except data processing centers which can be abated for up to 30 years)
  • Mortgage and recording taxes to which property is conveyed into or out of a public authority, city or county government
  • Data processing centers can receive abatements as follows:
  • Property tax abatement for 10 years from and after the date the private use property becomes owned for federal income tax purposes for projects that invest up to $200M within 10 years from the commencement of the project. Sales and use tax abatements can also be abated for the same 10 year period based on the same investment thresholds.
  • Property tax abatement for 20 years from and after the date the private use property becomes owned for federal income tax purposes for projects that invest over $200M but less than $400M within 10 years from the commencement of the project. Sales and use tax abatements can also be abated for the same 20 year period based on the same investment thresholds.
  • Property tax abatement for 30 years from and after the date the private use property becomes owned for federal income tax purposes for projects that invest over $200M within 10 years from the commencement of the project and exceed $400M within 20 years from the commencement of the project. Sales and use tax abatements can also be abated for the same 30 year period based on the same investment thresholds.

To receive an abatement for any or all of these taxes, a project must meet certain qualifications and follow certain procedures, as determined by law and regulation.

Statutory Requirements for Chapter 9B Abatements 

Business Activity

The qualifying project must constitute an “industrial, warehousing, or research activity”, which includes the following:

    • 1133 (logging)
    • 115111 (cotton ginning)
    • 2121 (coal mining)
    • 22111 (electric power generation)
    • 221330 (steam and air conditioning supply)
    • 31 (except National Industry 311811), 32, and 33 (manufacturing)
    • 423 and 424 (merchant wholesalers, goods)
    • 482 (rail transportation)
    • 4862 (pipeline transportation of natural gas)
    • 48691 (pipeline transportation of refined petroleum products)
    • 48699 (all other pipeline transportation)
    • 48819 (air transportation support activities)
    • 4882 (rail transport support activities)
    • 4883 (Port authority water transportation support activities (other than 48833))
    • 493 (warehousing and storage)
    • 511 (publishing industries)
    • 5121 (motion picture and video industries (other than 51213))
    • 51221 (record productions)
    • 517 (telecommunications)
    • 518 (data processing, hosting, and related services)
    • 51913 (internet publishing, broadcasting, web search portals)
    • 52232 (financial transactions processing, reserve and clearinghouse activities)
    • 54133 (engineering services)
    • 54134 (drafting services)
    • 54138 (testing laboratories)
    • 5415 (computer systems design and related services)
    • 541614 (process, physical distribution, logistics consulting services)
    • 5417 (scientific research and development services)
    • 55 (Management of companies (if not for the production of electricity))
    • 561422 (in bound call centers only)
    • 562213 (solid waste combustors and incinerators)
    • 56291 (remediation services)
    • 56292 (materials recovery facilities)
    • 611512 (flight training facilities)
    • 927 (space research and technology)
    • 92811 (national security).
  • Headquarters facilities as defined in NAICS 551114 (where at least 50 new jobs are created)
  • Data processing centers (where at least 20 new jobs are created)
  • Renewable energy facilities
  • Research & development facilities
  • Tourist destination attractions
  • Projects owned by utilities that produce electricity from alternative energy resources
  • Projects owned by utilities that produce electricity from hydropower production
  • The 11 targeted business sectors under the accelerate Alabama Strategic Economic Development Plan adopted in January 2012 by the Alabama Economic Development Alliance, created by Executive Order Number 21 of the Governor on July 18, 2011:
    • Advanced Manufacturing in
      • Aerospace/Defense, Automotive, Agricultural Products/Food Production, Steel/Metal or Forestry Products, Chemicals
    • Technology in
      • Biosciences, Information Technology or Enabling Technologies
    • Distribution/Logistics
    • Corporate Operations

Capital Investment Requirement

New Project

There is no threshold or limiting investment amount for a new abatement project with the exception of projects owned by utilities producing electricity:

  • Projects owned by utilities which produce electricity from alternative energy resources must have capital costs of at least $100,000,000
  • Projects which produce electricity from hydropower production must have capital costs of at least $5,000,000.

Major Addition

The additional capital investment by an industry that is expanding their current facilities in Alabama must be at least:

  • 30% of the original cost of the currently existing industrial property (sum total of the original facilities and equipment and any expansions and additions prior to the current addition); or
  • $2,000,000.

Learn more about Chapter 9B Abatement Procedures

Access Abatement Forms and Templates

Contact Tax Abatements

 

Changlan Li
Economic Development and
Tax Incentives Coordinator
Office of the Commissioner
Alabama Department of Revenue
P.O. Box 327001
Montgomery, AL 36132-7001
 334-242-1184
changlan.li@revenue.alabama.gov

 

 

Preeti Gratz
Economic Development and
Tax Incentives Coordinator
Office of the Commissioner
Alabama Department of Revenue
P.O. Box 327001
Montgomery, AL 36132-7001
 334-353-1087
preeti.gratz@revenue.alabama.gov

 

Kelly Graham
Director of Economic Development
Office of the Commissioner
Alabama Department of Revenue
P.O. Box 327001
Montgomery, AL 36132-7001
 334-242-1188
kelly.graham@revenue.alabama.gov