Budget & Taxes (Tax Incentives)

This bill requires that local governments in Alabama, including municipalities, counties, and public industrial authorities, must obtain approval from the Secretary of Commerce and the Governor before granting tax abatements for the state portion of certain taxes on industrial property. Under current law, local entities could abate both state and local taxes independently, but this legislation adds a state-level review process specifically for state tax abatements. The bill mandates that local governments submit written requests with details about the proposed tax reduction, duration, and financial analysis to the Secretary of Commerce, who will evaluate the project's return on investment and check for any prior defaults on economic agreements before recommending the abatement to the Governor. This change applies to abatements for construction-related transaction taxes and ad valorem taxes on private use industrial property, with specific provisions for data processing centers and technical corrections to existing tax abatement procedures. The new requirements take effect on October 1, 2026.

This bill proposes to exempt Jackson Hospital & Clinic, Inc. and JHC Pharmacy, LLC from all state, county, and municipal fees and taxes. The exemption would apply for a five-year period starting May 1, 2026, and ending September 30, 2031. The legislation would take effect immediately upon passage, removing the requirement for these two healthcare entities to pay various local and state taxes during the specified timeframe.

SB 265 modifies Alabama's tax incentives for data processing centers. It limits the maximum tax abatement period to 20 years starting January 1, 2027, and requires large data centers (meeting specific job and wage thresholds) to pay state sales/use taxes on purchases beginning the same date. The bill also extends the sunset date for these abatements and updates related tax code language. These changes directly affect new or expanded data processing centers qualifying under Alabama's definition (20+ jobs averaging $40,000+ annual compensation). The bill aims to balance economic development incentives with increased tax revenue collection for qualifying facilities.

HB 350 creates the Angel Investor Tax Credit Act, allowing Alabama residents or entities investing in qualifying startups to claim a 25% income tax credit on their investments. The credit applies to investments in businesses headquartered in Alabama with ≤100 employees, operating for ≤10 years, and focused on sectors like manufacturing, technology, or agribusiness (excluding retail or financial services). At least 50% of annual credits are reserved for "priority impact businesses" in healthcare, agriculture, education, or workforce development. Credits are capped at $250,000 per investor yearly and $12 million total annually for subsequent years, with requirements to maintain operations in Alabama for three years.

SB 235 exempts Crime Stoppers of Metro Alabama, Incorporated, from paying Alabama state sales and use taxes. It also allows counties and municipalities to choose whether to exempt this organization from local sales and use taxes through a local resolution or ordinance. The bill takes effect on September 1, 2026, and directly affects this specific nonprofit organization by removing its tax obligations for sales and use taxes at both state and optional local levels. This is a targeted tax exemption, not a broad policy change.

HB 3 exempts state sales and use taxes on fresh, unprocessed fish or seafood sold directly by anglers or fishermen (defined as "producers" in the bill). This applies only to retail sales of seafood in its original, unmanufactured state. Local counties and municipalities may choose to also exempt these sales from local taxes, but only if they adopt a specific resolution or ordinance. The exemption takes effect on September 1, 2026.