Sales and Use Tax Savings

The State of Alabama allows for the exemption of sales and use taxes (except for the portion earmarked for schools) on the initial costs of building and equipping a new facility. This covers all purchases of materials, equipment and furnishings related to putting a manufacturing facility into operation or for major expansions. Of course, the labor portion is not taxed by this method.  Equipment is taxed at 4% with 2.5% eligible for the exemption.

Ad Valorem Tax Savings

 

Property taxes, for both real and personal, may be abated for up to ten years from the date the project facility is operational (placed in service). This would offer savings on the taxable amount of total fixed assets for the first year with a declining amount available in the second through the tenth year, due to depreciation. New or used equipment, when included in the total expenditures, would increase the amount available to your company.

 

The tax incentive programs described above are available to your company regardless of the method of financing.

 

Miscellaneous Tax Benefits

 

Alabama is one of only six states that allow federal income tax to be deducted before computing state income tax resulting in an effective tax rate of approximately 3.5%.

 

All raw materials, goods in process, and finished goods are exempt from inventory (ad valorem) tax.

 

Alabama law provides for deductions or exemptions on corporate income tax, ad valorem tax, franchise tax, and sales tax for the amount invested in pollution control equipment.  In Alabama, state and local taxes per capita are only 67% of the average paid in the nation.

 

Capital Investment Tax Credit

 

The State of Alabama allows a corporate income tax credit of 5% of the capital invested in a single project for twenty years for new and expanding industries. Certain job, investment, and wage minimums do apply – *$2 million investment, 20 new additional jobs and $8.00 per hour.  In geographically distressed areas, the following employment requirements apply: Not less than $500,000 investment for a project with at least five (5) new employees.

 

Industrial Grants

 

Grants are available up to $150,000 to reimburse your company for costs associated with the reparation of a means to access a site as well as clearing, excavating, grading, drainage, and reasonable rehabilitation costs of buildings and other structures. The actual amount of the grant is based on the capital investment for the project.

 

Alabama Industrial Development Training

One Technology Court

Montgomery, AL 36116-3200

(334) 242-4158

http://www.aidt.edu

 

The Alabama Industrial Development Training (AIDT) program is one of the premier recruitment and retention tools in the nation. Their mission is to screen train, and offer a workforce that will surpass the productivity of various companies’ workers in other states. Their slogan “Our attitude is priceless, our training is free,” commits that they will furnish potential employees (you choose from a group of trainees) that not only have the skills that you require but also the outlook you desire. This all-inclusive fully customized training program is available at no cost.  Absenteeism and turnover rates of less than 2% have been experienced throughout the first year by many of the companies that have utilized the AIDT system. Management seminars and expansion support are also available in future years.

 

Important Information About Incentives

 

Prior to the date the qualifying project is “placed in service,” the company must notify the Alabama Department of Revenue of its intent to claim the incentives under Section 40-18-190 et. seq., Code of Alabama 1975. Effective June 4, 1999, the “written statement of intent” to claim the capital credit (Form INT) must “include the notification acknowledgment letter from the director” (of the Alabama Development Office) per Section 3, Act 99-351.

 

Workforce Investment Act

 

The Workforce Investment Act is a federal employment and training legislation intended to improve the employability of the United States workforce. The Workforce Investment Act (WIA) brings about a fundamental systemic change in employment and training programs in two key areas:

 

WIA repeals the Job Training Partnership Act (JPTA), a system for training economically disadvantaged individuals, and replaces it with an employment and training service delivery structure for adults, disclosed workers, and youth that is more locally focused, and with increased program flexibility.

 

WIA federally mandates that states and localities develop one-stop service delivery systems that integrate delivery of a broad range of employment and training programs.

 

The WIA provides funds where employers may receive up to fifty percent reimbursement of hourly wages paid to a trainee. This reimbursement serves as an incentive to encourage employers to hire individuals who do not have all the required skills for a particular job.

 

Upgrade training also may be available for existing employees. Detailed information on specific requirements to qualify are available through the Haleyville Career Center, part of the one-stop employment service afforded through WIA.

Additional Resources:

Alabama’s Income Tax Capital Credit
Business Priviledge Tax
Enterprise Zones Tax Credit
Favored Geographic Area
Foreign Trade Zones
Industrial Access Road and Bridge Program
Income Tax
Property & Sales Tax Abatements
Renewal Communities Program
Renewal Communities in Alabama
Sales and Use Tax
Summary of Alabama Taxes & Incentives
Tax Incentives for Industry