Incentives 2017-10-18T13:56:15+00:00
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There are big things coming out of Alabama. Get the latest scoop.

Incentives abound. We help you find them.

Alabama has many incentives to offer businesses. In just a few minutes, our Incentives Finder can help you discover eligible programs for your project.

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Incentives for industrial expansions with at least 50 Alabama jobs

These incentives also apply to expansions (regardless of the number of jobs) involving the following sectors:

  • Chemicals
  • Research
  • Engineering & Design
  • Data Centers
  • Metal/Machining Technology or Tool Making

Jobs Rebate Cash

  • Annual cash payments for up to 3% of last year’s payroll for new employees
  • Available for up to 10 years

Abatements

  • Sales tax abatements on construction materials and manufacturing machinery (non-educational taxes)
  • Property tax abatements for up to 20 years (non-educational taxes)
  • Abatements are generally available without creating 50 jobs

Investment Credits

  • Annual credits for up to 1.5% of capital invested
  • Available for up to 10 years, with five years of carry forward
  • The first three years may be sold for cash
  • Credits may offset income, utility gross receipts, insurance, and bank taxes, including taxes owed by existing operations.

With a $100 million investment and 75 jobs paying $25 per hour, incentives that could be available over the first 10 years are:

Jobs Rebate $1,170,000 Cash
Investment Credit $15,000,000 Tax Credits
Sales Tax Abatement $4,250,000 Abatement
Property Tax Abatement $6,233,220 Abatement

Things you should know

  • Incentives are granted upon the execution of a project agreement with the state, following the Department of Commerce’s analysis of the financial payback to the state.
  • Jobs rebate and investment credits may be granted for less than the percentages shown, and for shorter time periods. If no new jobs are created, the financial payback likely will not justify granting incentives at the full levels.
  • Jobs created at different locations can be aggregated, and investments can be made over a number of years.
  • Property tax abatements for years 11 to 20 require additional levels of approval which may be difficult to obtain.
  • In the example above, tax abatements were calculated using tax rates for Birmingham, Jefferson County, Alabama. Amounts are shown without a discount to present value.
  • In the example above, manufacturing equipment was assumed to be 40% of capital costs, and half of building costs were attributed to building materials. Utility gross receipts tax was assumed to be $228,061 per year. The investment was assumed to occur over a two-year period, with the project placed in service at the end of Year 2.
  • Enhanced incentives are available in counties with populations less than 25,000, or for the employment of a workforce at least 12% of which is veterans.

INCENTIVES FOR OTHER EXPANSIONS WITH AT LEAST $2 MILLION INVESTED

For the first time, Alabama’s incentives cover capitalized replacement and maintenance property as follows:

Abatements

  • Tax abatements for state and non-educational local sales and use taxes on construction materials and manufacturing machinery
  • Property tax abatements (non-educational taxes) for up to 20 years (limited to the incremental increase in such taxes if the property does not perform a new function)

Utility Tax Credits

  • Cash refunds for incremental increase in utility gross receipts tax due to increased energy use
  • Available for up to 10 years

With a $2 million investment and no new jobs, incentives that could be available over the first 10 years are:

Sales Tax Abatement $77,500 Abatement
Property Tax Abatement $75,970 Abatement
UGRT Refund $16,940 Cash

Things you should know

  • Property tax abatements require additional levels of approval which may be difficult to obtain.
  • In the example, tax abatements were calculated using tax rates for Birmingham, Jefferson County, Alabama. Amounts are shown without a discount to present value.
  • In the example above, incremental property taxes on $2 million of new equipment was calculated assuming that the property which was replaced had a value of $500,000. Incremental utility gross receipts tax was assumed to be $1,694. New equipment was assumed to be placed in service at the end of Year 1.

INCENTIVES FOR ALL INDUSTRIAL PROJECTS

The state, cities and counties have various programs to provide infrastructure and can provide other discretionary incentives, as warranted.

The state can also provide training from Alabama’s primary workforce development agency (AIDT).

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