U.S. flag An official website of the United States government.

Dot gov

The .gov means it's official.
Federal government websites always use a .gov or .mil domain. Before sharing sensitive information online, make sure you’re on a .gov or .mil site by inspecting your browser's address (or "location") bar.

SSL

This site is also protected by an SSL (Secure Sockets Layer) certificate that's been signed by the U.S. government. The https:// means all transmitted data is encrypted  — in other words, any information or browsing history that you provide is transmitted securely.

Chapter 9G Abatements

About the  Alabama Reinvestment Act Chapter 9G Abatements For Renovation, Modification and (True) Replacement of Equipment Projects

The Alabama Reinvestment & Abatements Act (“Reinvestment Act”) (Chapter 9G, Title 40, Code of Alabama 1975 ) allows for certain reinvestment projects to qualify for sales, use and property tax abatements on capitalized replacement equipment and property purchased for capitalized repairs, rebuilds, renovations, and maintenance if the property is acquired as part of any addition, expansion, improvement, renovation, re-opening, or rehabilitation of a facility existing facility, or replacement of any existing equipment or tangible personal property that qualifies as a “qualifying project”.  While this incentive can be used for facility expansion and equipment upgrades, Chapter 9G abatements are primarily for those companies undertaking projects such as reopening a closed facility, refurbishing an existing facility and/or purchasing replacement equipment.

The Reinvestment Act gives cities, counties, and public industrial authorities, and the Governor the ability to abate the following for projects that provide reinvestment to existing facilities:

  • 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

Chapter 9G Sales Tax Abatements

Chapter 9G sales and use tax abatements are subject to and shall follow the same procedures, provisions, limitations, and definitions under Chapter 9B with two exceptions:

  • Capitalized replacement equipment or tangible personal property can be abated
  • Capitalized repairs, rebuilds, renovations and maintenance can be abated

Chapter 9G Property Tax Abatements

Chapter 9G abatements are subject to and shall follow the same procedures, provisions, limitations, and definitions under Chapter 9B with a few exceptions.

  • Capitalized replacement equipment and capitalized repairs, rebuilds, and maintenance on real and personal property can be abated
  • The amount of the property tax abatement shall be equal to the noneducational property taxes owed, minus the noneducational property taxes owed from the tax year immediately before the project was placed in service, specific to the property that is receiving an abatement
  • Regardless of the length of the abatement, the abatement may be granted as follows:
    • City non-educational property taxes may be abated only with the consent by resolution of the governing body of the city
    • County non-educational property taxes may be abated only with the consent by resolution of the governing body of the county
    • State non-educational property taxes may be abated only with the consent of the Governor
    • The governing body of a county and a municipality may separately authorize one or more public industrial authorities to provide by resolution for such consent on their behalf

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 9G Abatements

Qualifying Project Requirements

  • The project predominately involves an approved activity
  • Must spend at least $2M in capital expenditures as part of any addition, expansion, improvement, renovation, re-opening, or rehabilitation of a facility, or replacement of any existing equipment or tangible personal property
  • No state project agreement has been or will be entered into with the Governor for the provision of other incentives

Business Activity

The qualifying project must constitute an “approved activity” which includes the following:

  • Any of the following trades or businesses in the 2012 North American Industrial Classification System (NAICS), promulgated by the Executive Office of the President of the United States, Office of Management and Budget:
    • 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)
  • The production of biofuel as such term is defined in Section 2-2-90(c)(2)
  • Research & development facilities
  • The national or regional headquarters for a company that conducts significant business operations outside the state and that will serve as the principal office of the company’s principal operating officer with chief responsibility for the daily business operations of the company
  • One of 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

Learn More About Chapter 9G Abatement Procedures

See Abatement forms and templates

Contact Us:

Ashley Moon
Revenue Examiner, CPM, MPA
Office of the Commissioner
Alabama Department of Revenue
P.O. Box 327001
Montgomery, AL 36132-7001

(334) 242-1184
ashley.moon@revenue.alabama.gov

Kelly Graham
Director of Economic Development, CPM
Office of the Commissioner
Alabama Department of Revenue
P.O. Box 327001
Montgomery, AL 36132-7001

(334) 242-1188
kelly.graham@revenue.alabama.gov