The Alabama Jobs Act provides incentives to businesses for projects that create new jobs and whose predominant activity involves chemical manufacturing, data centers, engineering, design, research, or metal/machining technology, or for businesses that create jobs and have a base workforce of at least 50 new employees for all other projects. Unless the program is extended or expanded, project agreements must have been executed on or prior to December 31, 2019, with an aggregate balance of outstanding incentives not to exceed $850 million.
Companies may claim either or both of the following:
- A jobs credit against utility taxes equal to 3% of wages paid to eligible employees in the previous year for 10 years. The jobs credit may be realized to the incentivized company as a refund out of utility taxes actually paid or, in any one year if the credit exceeds the amount of taxes owed, the incentivized company may carry forward the credit for up to 5 years.
- An investment credit against income taxes, financial institution excise taxes, insurance premium taxes, utility taxes, or some combination of these taxes in an annual amount of 1.5% of the capital investment for 10 years, based on the terms and conditions of the project agreement entered into between an approved company and the governor. The investment credit may be realized as a credit against taxes actually paid or, in any one year if the credit exceeds the amount of taxes owed, as a carry forward for up to 5 years; for companies taxed as flow-through entities, the credit may be allocated among some or all of its owners; or all or part of the first 3 years of the credit may be transferred and applied by another person or company, if approved by the Secretary of Commerce.
To qualify for an incentive, the Secretary of Commerce and the governor must determine that a project is a qualifying project and that the amount of tax incentives sought is exceeded by the anticipated revenues to the state, including income, property, business privilege, utility and sales and use taxes as they arise from: (1) construction activities related to the qualifying product; (2) the purchase of building materials and equipping of the qualifying project (3) subsequent equipping of the qualifying project; (4) the operation of the qualifying project. The incentive period does not begin for either credit until after the project is placed into service.