Ala. Code § 40-9B-1 Short Title.
40-9B-1. Short Title.
This chapter shall be known and may be cited as the “Tax Incentive Reform Act of 1992.”
(Acts 1992, No. 92-599, p. 1239, §1.)
Tax Incentive Reform Act of 1992.
Ala. Code tit. 40, ch. 9B
in effectAla. Code § 40-9B-2 Legislative Findings.
40-9B-2. Legislative Findings.
The Legislature recognizes the importance of industrial development to the well being of the people of the state. The Legislature also recognizes that industries are attracted by a number of factors, including natural resources, a well-trained workforce, good roads, and excellent education. The Legislature also recognizes that in some cases additional incentives are required to succeed in attracting new industries and encouraging existing industries to expand and therefore intends to continue to allow county and municipal governments and certain public corporations to provide substantial tax incentives.
(Acts 1992, No. 92-599, p. 1239, §2.)
Ala. Code § 40-9B-3 Definitions.
40-9B-3. Definitions.
(a) For purposes of this chapter, the following words and phrases mean:
(1) ABATE, ABATEMENT. A reduction or elimination of a taxpayer’s liability for tax or payments required to be made in lieu thereof. An abatement of transaction taxes imposed under Chapter 23, or payments required to be made in lieu thereof, shall relieve the seller from the obligation to collect and pay over the transaction tax as if the sale were to a person exempt, to the extent of the abatement, from the transaction tax.
(2) ALTERNATIVE ENERGY RESOURCES. The definition given in Section 40-18-1.
(3) CONSTRUCTION RELATED TRANSACTION TAXES. The transaction taxes imposed by Chapter 23, or payments required to be made in lieu thereof, on tangible personal property and taxable services incorporated into an industrial development property, the cost of which may be added to capital account with respect to the property, determined without regard to any rule which permits expenditures properly chargeable to capital account to be treated as current expenses.
(4) DATA PROCESSING CENTER. An establishment at which not less than 20 new jobs are located, the average annual total compensation, including benefits, of such new jobs to be not less than forty thousand dollars ($40,000), and such establishment is engaged in the provision of complete processing and specialized reports from data, the provision of automated data processing and data entry services, the provision of an infrastructure for hosting or data processing services, the provision of specialized hosting activities, the provision of application service provisioning, the provision of general time-share mainframe facilities, the provision or operation of computer equipment or enabling software for the processing, storage, backup, retrieval, communication, or distribution of data, or some combination of the foregoing, without regard to whether any other activities are conducted at the establishment.
(5) EDUCATION TAXES. Ad valorem taxes, or payments required to be made in lieu thereof, that must, pursuant to the Constitution of Alabama of 2022, as amended, legislative act, or the resolution or other action of the governing board authorizing the tax, be used for educational purposes or for capital improvements for education and local construction related transaction taxes levied for educational purposes or for capital improvements for education.
(6) HEADQUARTERS FACILITY. Any trade or business described in NAICS Code 551114, at which not less than 50 new jobs are located.
(7) HYDROPOWER PRODUCTION. The definition given in Section 40-18-1.
(8) INDUCEMENT. Refers to an agreement, or an “inducement agreement,” entered into between a private user and a public authority or county or municipal government and/or a resolution or other official action, an “inducement resolution,” “inducement letter,” or “official action” adopted by a public authority or county or municipal government, in each case expressing, among other things, the present intent of such public authority or county or municipal government to issue bonds in connection with the private use property therein described. Notwithstanding any provision in this chapter to the contrary, neither an inducement nor a request for inducement shall be required to apply for, grant, or receive any abatement of taxes allowed to be abated under this chapter.
(9) INDUSTRIAL DEVELOPMENT PROPERTY. Real and/or personal property acquired in connection with establishing or expanding an industrial or research enterprise in Alabama.
(10) INDUSTRIAL OR RESEARCH ENTERPRISE.
a. Any trade or business predominantly consisting of any one or more of the following:
1. Described by NAICS Code 1133, 115111, 2121, 22111, 221330, 31 (other than 311811), 32, 33, 423, 424, 482, 4862, 48691, 48699, 48819, 4882, 4883 (other than 48833), 493, 5121 (other than 51213), 5122, 513, 517, 518 (without regard to the premise that data processing and related services be performed in conjunction with a third party), 51929, 52232, 54133 (if predominantly in furtherance of another activity described in this article), 54134 (if predominantly in furtherance of another activity described in this article), 54138, 5415, 541614, 5417, 55 (if not for the production of electricity), 561422 (other than establishments that originate telephone calls), 562213, 56291, 56292, 611512, 927, or 92811.
2. A target of the state’s economic development efforts pursuant to either of the following:
(i) The comprehensive economic development plan, CatALyst, or any amended version or successor document thereto; or
(ii) A type listed in a rule adopted by the Department of Commerce, other than a rule submitted as an emergency rule.
Notwithstanding the foregoing, the activities described in this definition shall not predominantly concern farming activities involving trees, animals, or crops, nor the retail sale of tangible personal property or services. This provision shall not be deemed to exclude customer service centers or call centers otherwise allowed or provided for herein.
b. With respect to abatements granted in accordance with Section 40-9B-9, and only with respect to such abatements, “industrial or research enterprise” means any trade or business described in NAICS Code 493, 488310, or 488320, when such trade or business is conducted on premises in which the Alabama Port Authority has an ownership, leasehold, or other possessory interest and such premises are used as part of the operations of the Alabama Port Authority.
c. “Industrial or research enterprise” includes the above-described trades and business and any others as may hereafter be reclassified in any subsequent publication of the NAICS or similar industry classification system developed in conjunction with the United States Department of Commerce or Office of Management and Budget.
d. “Industrial or research enterprise” also includes any underground natural gas storage facility which is located in the Gulf Opportunity Zone, as that phrase is defined in the Gulf Opportunity Zone Act of 2005, developed from existing geologic reservoirs, including, without limitation, salt domes, and placed in service on or before December 31, 2013.
e. “Industrial or research enterprise” also includes any plant, property, or facility that meets both of the following:
1. It produces electricity from:
(i) Alternative energy resources and has capital costs of at least one hundred million dollars ($100,000,000); or
(ii) Hydropower production and has capital costs of at least five million dollars ($5,000,000).
2. All or a portion of the plant, property, or facility is owned by one or more of the following:
(i) A utility described in Section 37-4-1(7)a.
(ii) An entity organized under the provisions of Chapter 6 of Title 37.
(iii) An authority both organized and existing pursuant to Chapter 50A of Title 11 and subject to the payments required to be made in lieu of ad valorem, sales, use, license, and severance taxes imposed by Section 11-50A-7.
(iv) An entity in which one or more of the foregoing owns an interest.
f. “Industrial or research enterprise” also includes any headquarters facility.
g. “Industrial or research enterprise” also includes any data processing center.
h. “Industrial or research enterprise” also includes any research and development facility.
i. “Industrial or research enterprise” also includes any renewable energy facility.
j. “Industrial or research enterprise” also includes any tourism destination attraction.
(11) MAJOR ADDITION. Any addition to an existing industrial development property that equals the lesser of: 30 percent of the original cost of the industrial development property or two million dollars ($2,000,000). For purposes of this subdivision, the original cost of existing industrial development property shall be the amount of industrial development property with respect to which an abatement was granted under this chapter when the property was constructed, or if the existing industrial development property was constructed before January 1, 1993, the maximum amount that would have been allowed if the provisions of this chapter had applied at the time it was constructed. Only property that constitutes industrial development property shall be taken into account in making the determination in the previous sentence. “Major addition” shall include any addition costing at least two million dollars ($2,000,000) which constitutes an industrial or research enterprise, regardless of whether added to an existing industrial development property.
(12) MAXIMUM EXEMPTION PERIOD. Except as provided in Section 40-9B-11, a period equal to the shorter of:
a. Either of the following:
1. Twenty years from and after: (i) the date of initial issuance by a county, city, or public authority of bonds to finance any costs of a private use property; or (ii) if no such bonds are ever issued, the later of: A. the date on which title to the property was acquired by or vested in the county, city, or public authority; or B. the date on which the property is or becomes owned, for federal income tax purposes, by a private user.
2. Exclusively with respect to one or more private users of a data processing center, the following:
(i) A period of 10 years from and after the date on which private use property is or becomes owned, for federal income tax purposes, by such private user or users (including the lessor and any lessee with respect to co-location centers), if the aggregate capital investment in the data processing center by such private user or users does not exceed two hundred million dollars ($200,000,000) within 10 years from the date on which a private user commences the acquisition, construction, and equipping of the data processing center.
(ii) For any abatement granted prior to January 1, 2027, a period of 20 years from and after the date on which private use property is or becomes owned, for federal income tax purposes, by such private user or users, including the lessor and any lessee with respect to co-location centers, if the aggregate capital investment in the data processing center by such private user or users exceeds two hundred million dollars ($200,000,000) but is not greater than four hundred million dollars ($400,000,000) within 10 years from the date on which a private user commences the acquisition, construction, and equipping of the data processing center. For any abatement granted on or after January 1, 2027, a period of 20 years from and after the date on which the private use property is or becomes owned, for federal income tax purposes, by such private user or users, including the lessor or any lessee with respect to co-location centers, if the aggregate capital investment in the data processing center by such private user or users exceeds two hundred million dollars ($200,000,000) within 10 years from the date on which a private user commences the acquisition, construction, and equipping of the data processing center.
(iii) For any abatement granted until January 1, 2027, a period of 30 years from and after the date on which private use property is or becomes owned, for federal income tax purposes, by such private user or users, including the lessor and any lessee with respect to co-location centers, if the aggregate capital investment in the data processing center by such private user or users exceeds two hundred million dollars ($200,000,000) within 10 years from the date on which a private user commences the physical work of constructing and equipping the data processing center and exceeds four hundred million dollars ($400,000,000) within 20 years from the date on which a private user commences the acquisition, construction, and equipping of the data processing center. This item (iii) shall not apply to any abatement granted after January 1, 2027.
(iv) For abatements granted on or after January 1, 2027, a private user or users may qualify for an additional 10 years of abatement, for a total maximum exemption period not to exceed 30 years, if the private user or users: (1) satisfy the capital investment thresholds contained in this section; and (2) enter into a binding written agreement, approved by the Department of Revenue, the Department of Commerce, and the affected local governing body, committing to provide qualified local investments for the benefit of the benefited community. The agreement shall describe the nature, timing, dollar value, and verification procedures applicable to the qualified local investments. Qualified local investments consist of:
A. Infrastructure improvements, including roads, bridges, or other public facilities that support local development;
B. Improvements to broadband in locations determined to be an unserved area as defined in Section 41-23-212;
C. Water or wastewater system upgrades that serve the local community; or
D. Local education support, including capital improvements, equipment, or programmatic support for public K-12 schools, public charter schools, career technical centers, or community college programs, that serve the benefited community.
For purposes of this item (iv), “benefited community” means: (1) the county in which the project is located; (2) any municipality located in whole or in part within that county; or (3) any county or municipality adjacent to the physical project site as determined by the written agreement, regardless of county lines, provided such jurisdiction consents in writing to receive the investment. The county and, as applicable, any municipality in which the project is located, by mutual written agreement with any jurisdiction described in this paragraph, may designate the recipient or recipients of any portion of the qualified local investments.
If the private user or users fail to satisfy any material obligation contained in the binding agreement required under this item (iv), the additional 10-year abatement authorized under this item (iv) shall be revoked, and the abatement shall revert to the 20-year maximum exemption period otherwise applicable. Upon such revocation, the private user or users shall repay all state taxes abated during the extended period, together with interest as provided by law.
For purposes of this subparagraph 2., a private user’s aggregate capital investment in a data processing center shall include all real and personal property comprising a data processing center, the costs of which may be capitalized for federal income tax purposes. In no event shall abatements of construction related transaction taxes or noneducational ad valorem taxes granted for a data processing center apply beyond the expiration of the applicable maximum exemption period; or
b. The period ending on the date on which the property has ceased, for six consecutive months, to be used in the active conduct of an industrial or research enterprise.
(13) MORTGAGE AND RECORDING TAXES. The taxes imposed by Chapter 22.
(14) NAICS CODE. Any sector, subsector, industry group, industry, or national industry of the 2022 North American Industry Classification System, or any similar classification system developed in conjunction with the United States Department of Commerce or Office of Management and Budget.
(15) NONEDUCATIONAL AD VALOREM TAXES. Ad valorem taxes, or payments required to be made in lieu thereof, imposed by the state, counties, municipalities, and other taxing jurisdictions of Alabama which are not required to be used for educational purposes or for capital improvements for education.
(16) PERSON. Includes any individual, partnership, trust, estate, or corporation.
(17) PRIVATE USER. Any individual, partnership, or corporation organized for profit that is or will be treated as the owner of private use property for federal income tax purposes, any entity organized under Chapter 6 of Title 37, and any authority both organized and existing pursuant to Chapter 50A of Title 11 and subject to the payments required to be made in lieu of ad valorem, sales, use, license, and severance taxes imposed by Section 11-50A-7.
(18) PRIVATE USE INDUSTRIAL PROPERTY. Private use property that also constitutes industrial development property.
(19) PRIVATE USE PROPERTY. Any real and/or personal property that is or will be treated as owned by a private user for federal income tax purposes even though title may be held by a public authority or municipal or county government; any real and/or personal property that is owned by any entity organized under Chapter 6 of Title 37; and any real and/or personal property that is owned by any authority both organized and existing pursuant to Chapter 50A of Title 11 and subject to the payments required to be made in lieu of ad valorem, sales, use, license, and severance taxes imposed by Section 11-50A-7.
(20) PUBLIC AUTHORITY. A corporation created for public purposes pursuant to a provision of the Constitution of Alabama of 2022, or a general or local law that authorized it to issue bonds, the interest on which is exempt from the Alabama income tax, as in effect on May 21, 1992.
(21) PUBLIC INDUSTRIAL AUTHORITY. A public authority authorized to issue bonds to acquire, construct, equip, or finance industrial development property.
(22) RENEWABLE ENERGY FACILITY. Any plant, property, or facility that either:
a. Produces electricity or natural gas, in whole or in part, from biofuels as such term is defined in Section 2-2-90(c)(2) or from renewable energy resources as such term is defined in Section 40-18-1(30) with the exception that hydropower production shall be excluded from such definition; or
b. Produces biofuel as such term is defined in Section 2-2-90(c).
(23) RESEARCH AND DEVELOPMENT FACILITY. An establishment engaged in conducting original investigations undertaken on a systematic basis to gain new knowledge or applying research findings or other scientific knowledge to create new or significantly improved products or processes, or both.
(24) STATEMENT OF INTENT. A written statement of intent to claim an abatement provided in this chapter, or to petition for local tax abatement, relating to an industrial or research enterprise described in paragraph (10)e. which is filed with the Department of Revenue at any time prior to the date on which the industrial or research enterprise described in paragraph (10)e. is placed in service in accordance with such procedures and on such form or forms as may be prescribed by the Department of Revenue. A statement of intent shall contain a description of the industrial or research enterprise described in paragraph (10)e.; the date on which the acquisition, construction, installation, or equipping of the industrial or research enterprise described in paragraph (10)e. was commenced or is expected to commence; the actual or, if not known, the estimated capital costs of the industrial or research enterprise described in paragraph (10)e.; the number of new employees to be employed at the industrial or research enterprise described in paragraph (10)e.; and any other information required by the Department of Revenue.
(25) TOURISM DESTINATION ATTRACTION. a. A commercial enterprise that is open to the public not less than 120 days during a calendar year and is designed to attract visitors from inside or outside of the State of Alabama, typically for its inherent cultural value, historical significance, natural or man-made beauty, or entertainment or amusement opportunities. The term shall include, but not be limited to, a cultural or historical site; a botanical garden; a museum; a wildlife park or aquarium open to the public that cares for and displays a collection of animals or fish; an amusement park; a convention hotel and conference center; a water park; or a spectator venue or arena.
b. A “tourism destination attraction” shall not include a facility primarily devoted to the retail sale of goods; a shopping center; a restaurant; a movie theater; a bowling alley; a fitness center; a miniature golf course; or a nightclub. The capital costs of the construction of a tourism destination attraction may include the capital costs associated with the construction of any retail establishment, restaurant or other portion of the tourism destination attraction. The term also does not include any gaming facility or establishment that the Secretary of the Department of Commerce deems to be serving the local community.
(b) The abatements of ad valorem taxes, and payments in lieu thereof, allowed by amendments to this section by Act 2008-275 shall become effective for projects for which statements of intent are filed after December 31, 2011. No ad valorem taxes, or payments in lieu thereof, shall be abated for periods prior to January 1, 2012. The other abatements allowed by amendments made to this section by Act 2008-275 shall become effective after December 31, 2011.
For a qualifying industrial or research enterprise described in paragraph (a)(10)j., the approval of the abatement of a specified ad valorem tax or construction related tax levied or imposed by a county or municipality, or payments required to be made in lieu thereof, shall take effect only upon adoption of a resolution by the governing body of that county or municipality approving such abatement or abatements.
(Acts 1992, No. 92-599, p. 1239, §3; Acts 1995, No. 95-321, p. 683, §1; Acts 1996, No. 96-647, p. 1030, §1; Act 2001-503, p. 886, §12; Act 2006-633, p. 1728, §1; Act 2008-275, p. 402, §4; Act 2009-722, p. 2143, §2; Act 2012-54, p. 76, §1; Act 2012-210, p. 351, §2; Act 2012-436, p. 1215, §2; Act 2015-24, §3; Act 2026-550, §1; Act 2026-573, §1.)
Ala. Code § 40-9B-4 Authorization of Abatement.
40-9B-4. Authorization of Abatement.
(a) Noneducational ad valorem taxes, construction related transaction taxes, except those local construction related transaction taxes levied for educational purposes or for capital improvements for education, and mortgage and recording taxes, or payments required to be made in lieu thereof, and in the case of a qualifying industrial or research enterprise described in Section 40-9B-3(a)(10)e. which is owned by an entity organized under Chapter 6 of Title 37, or by an authority both organized and existing pursuant to Chapter 50A of Title 11 and subject to the payments required to be made in lieu of ad valorem, sales, use, license, and severance taxes imposed by Section 11-50A-7, in addition to the foregoing, all other ad valorem taxes, or payments required to be made in lieu thereof, imposed by the state, counties, municipalities, and other taxing jurisdictions of Alabama, may be abated with respect to private use industrial property and security documents and other recordable documents associated therewith as provided in this chapter.
(b)(1) No abatement of noneducational ad valorem taxes, other ad valorem taxes, or payments required to be made in lieu of the foregoing, may exceed the maximum exemption period. No further abatement with respect to the same private use industrial property may be granted unless there is a major addition to the property, in which event abatement may be granted only with respect to the noneducational ad valorem taxes, and in the case of a qualifying industrial or research enterprise described in Section 40-9B-3(a)(10)e. which is owned by an entity organized under Chapter 6 of Title 37, or by an authority both organized and existing pursuant to Chapter 50A of Title 11 and subject to the payments required to be made in lieu of ad valorem, sales, use, license, and severance taxes imposed by Section 11-50A-7, in addition to the noneducational ad valorem taxes, with respect to all other ad valorem taxes, or payments required to be made in lieu thereof, imposed by the state, counties, municipalities, and other taxing jurisdictions of Alabama, on the major addition by complying with the procedures set forth in this chapter. Notwithstanding the immediately preceding sentence, with respect to a data processing center, an abatement of noneducational ad valorem taxes, other ad valorem taxes, or payments required to be made in lieu thereof, shall apply to all real and personal property comprising a data processing center, the costs of which may be capitalized for federal income tax purposes, acquired at any time during the applicable maximum exemption period, including, but not limited to, computers, software licensed for use at the qualifying data processing center, equipment supporting computing, networking, or data storage; cooling systems, cooling towers, and other temperature infrastructure; power infrastructure for transformation, distribution, or management of electricity used for the maintenance and operation of a data processing center, including, but not limited to, exterior dedicated business-owned substations, backup power generation systems, battery systems, and related infrastructure; and any other equipment necessary for the maintenance and operation of a data processing center.
(2) Effective for an abatement granted: (i) on or after January 1, 2027; and (ii) to a data processing center with a total peak demand of 100 megawatts or greater, no abatement of state noneducational ad valorem taxes shall extend beyond the date the private use industrial property is placed in service.
(c)(1) An abatement of construction related transaction taxes, or payments required to be made in lieu thereof, shall apply only to tangible personal property and taxable services incorporated into a private use industrial property, the cost of which may be added to capital account with respect to the property, determined without regard to any rule that permits expenditures properly chargeable to capital account to be treated as current expenses. No abatement of construction related transaction taxes, or payments required to be made in lieu thereof, shall extend beyond the date the private use industrial property is placed in service; provided, however, that an abatement of construction related transaction taxes, or payments required to be made in lieu thereof, for a data processing center shall apply to all taxable services and acquisitions of real and personal property comprising the data processing center, the costs of which may be capitalized for federal income tax purposes, occurring at any time during the applicable maximum exemption period, including, but not limited to, computers, software licensed for use at the qualifying data processing center, equipment supporting computing, networking, or data storage; cooling systems, cooling towers, and other temperature infrastructure; power infrastructure for transformation, distribution, or management of electricity used for the maintenance and operation of a data processing center, including, but not limited to, exterior dedicated business-owned substations, backup power generation systems, battery systems, and related infrastructure; and any other equipment necessary for the maintenance and operation of a data processing center. No further abatement may be granted for construction related transaction taxes, or payments required to be made in lieu thereof, with respect to the private use industrial property unless incurred in connection with a major addition, in which event only construction related transaction taxes, or payments required to be made in lieu thereof, that may be added to capital account with respect to the major addition, determined without regard to any rule that permits expenditures properly chargeable to capital account to be treated as current expenses, may be abated by complying with the procedures set forth in Act 92-599 as amended, and as amended by Act 2008-275. Except in the case of a qualifying industrial or research enterprise described in Section 40-9B-3(a)(10)e. which is owned by an entity organized under Chapter 6 of Title 37, or by an authority both organized and existing pursuant to Chapter 50A of Title 11 and subject to the payments required to be made in lieu of ad valorem, sales, use, license, and severance taxes imposed by Section 11-50A-7, no local construction related transaction taxes levied for educational purposes or capital improvements for education, or payments required to be made in lieu thereof, may be abated.
(2)a. Effective for an abatement granted: (i) on or after January 1, 2027; and (ii) to a data processing center with a total peak demand of 100 megawatts or greater, construction related transaction taxes levied pursuant to Chapter 23, or payments required to be made in lieu thereof, on computers, servers, software licensed for use at the data processing center, equipment supporting computing, networking, or data storage; cooling systems, cooling towers, and other temperature infrastructure; and any other equipment necessary for the maintenance and operation of a data processing center, shall be eligible for abatement throughout the applicable maximum exemption period as provided in subdivision (1).
b. Except for those abatements provided in paragraph a., effective for an abatement granted: (i) on or after January 1, 2027; and (ii) to a data processing center with a total peak demand of 100 megawatts or greater, no abatement of state construction related transaction taxes levied pursuant to Chapter 23, or payments required to be made in lieu thereof, shall extend beyond the date the private use industrial property is placed in service.
(3) Notwithstanding subdivision (2), the Governor may abate the state construction related transaction taxes for the maximum exemption period for a data processing center with a total peak demand of 100 megawatts or greater if the data processing center is located in a “targeted county” as defined in Section 40-18-376.1.
(d) Mortgage and recording taxes with respect to mortgages, deeds, and documents relating to issuing or securing obligations and conveying title into or out of the public authority or county or municipal government with respect to a private use industrial property may be abated by complying with the procedures set forth in this chapter.
(e) An abatement under this section may be granted only with respect to private use industrial property that has not previously been placed in service by the private user who is applying for the abatement or by a person who is a related party, as defined in 26 U.S.C. § 267, with respect to such private user.
(f)(1) For a qualifying industrial or research enterprise described in Section 40-9B-3(a)(10)e. which is owned by a utility described in Section 37-4-1(7)a., and which is a coal gasification or liquefaction project or an advanced fossil-based generation project, as such terms are defined in Section 40-18-1, or which utilizes hydropower production, an abatement under this section shall be in an amount equal to 100 percent of the state noneducational ad valorem taxes owed for plant, property, and facilities for the maximum exemption period, and in an amount equal to 50 percent of the state construction related transaction taxes. The abatement shall not be subject to the procedures in Section 40-9B-5 or 40-9B-6.
(2) For a qualifying industrial or research enterprise described in Section 40-9B-3(a)(10)e. which is owned by a utility described in Section 37-4-1(7)a., and which is a project using an alternative energy resource the abatements for which are not provided in subdivision (1), an abatement under this section shall be in an amount equal to 100 percent of the state noneducational ad valorem taxes owed for plant, property, and facilities for the maximum exemption period, and in an amount equal to 50 percent of the state construction related transaction taxes. The abatement shall not be subject to the procedures in Section 40-9B-5 or 40-9B-6.
(3) For a qualifying industrial or research enterprise described in Section 40-9B-3(a)(10)e. which is owned by an entity organized under Chapter 6 of Title 37, an abatement under this section shall be in an amount equal to 100 percent of the ad valorem taxes owed for plant, property, and facilities for the maximum exemption period, and in an amount equal to 100 percent of the construction related transaction taxes. An abatement of ad valorem taxes levied or imposed by counties or municipalities may be granted as provided in subsection (h). An abatement of the construction related transaction taxes imposed by the governing body of a county pursuant to authority conferred under Article 1 of Chapter 12 of Title 40, or any general, special, or local act of the Legislature, and such transaction taxes imposed by the governing body of a municipality pursuant to authority conferred under Article 3 of Chapter 51 of Title 11, or any general, special, or local act of the Legislature, and all transaction taxes imposed by any other local taxing jurisdiction of Alabama may be granted as provided in subsection (h). The abatement shall not be subject to the procedures in Section 40-9B-5 or 40-9B-6.
(4) For a qualifying industrial or research enterprise described in Section 40-9B-3(a)(10)e., which is owned by an authority both organized and existing pursuant to Chapter 50A of Title 11 and subject to the payments required to be made in lieu of ad valorem, sales, use, license, and severance taxes imposed by Section 11-50A-7, an abatement under this section against the payments required to be made in lieu of taxes imposed by Section 11-50A-7 shall be allowed in an amount equal to 100 percent of the payments required to be made in lieu of ad valorem taxes owed for plant, property, and facilities for the maximum exemption period, and in an amount equal to 100 percent of the payments required to be made in lieu of the construction related transaction taxes, including, without limitation, payments required to be made in lieu of all transaction taxes imposed by the governing body of a county pursuant to authority conferred under Article 1 of Chapter 12 of this title, or any general, special, or local act of the Legislature, all transaction taxes imposed by the governing body of a municipality pursuant to authority conferred under Article 3 of Chapter 51 of Title 11, or any general, special, or local act of the Legislature, and payments required to be made in lieu of all transaction taxes imposed by any other taxing jurisdiction of Alabama. The abatement of such payments required to be made in lieu of local taxes may be granted as provided in subsection (h). The abatement shall not be subject to the procedures in Section 40-9B-5 or 40-9B-6.
(5) For a qualifying industrial or research enterprise described in Section 40-9B-3(a)(10)e., which is owned by a utility described in Section 37-4-1(7)a., the abatement for state noneducational ad valorem taxes provided in subdivision (1) or (2) of this subsection shall be equal to 100 percent of the state noneducational ad valorem taxes owed for plant, property, and facilities for the maximum exemption period if the industrial or research enterprise is located in either of the following:
a. Any area designated or created as an enterprise zone by law or that is governed by the Alabama Enterprise Zone Act.
b.1. Any Alabama county that is considered to be less developed. A county is considered to be less developed if it has been found to be less developed by the Alabama Department of Workforce using the most current data available from the United States Departments of Labor or Commerce, the United States Bureau of the Census, or any other federal or state agency, and which finding shall be made not later than January 1 of each year thereafter.
2. A county shall be found to be less developed if it is ranked as the forty-fifth through sixty-seventh county, inclusive, using the following factors:
(i) Percent change in population over the most recent five-year period.
(ii) Personal per capita income in the last calendar year for which data are available.
(iii) The average percent employed over the last 12 months for which data are available.
3. The factors used in ranking counties shall be weighted in the following manner:
(i) Percent change in population (25 percent).
(ii) Personal per capita income (25 percent).
(iii) Average percent employed (50 percent).
(6)a. To the extent that a plant, property, or facility described in Section 40-9B-3(a)(10)e. is owned in whole or in part by one or more private users listed in paragraph c., including, but not limited to, ownership as tenants in common, joint tenants, or owners of an undivided interest, then each private user shall be entitled to the abatement allowed under this section with a percentage limitation equal to the ownership interest percentage of the private user multiplied by the percentage limitation found in this subsection applicable to the private user for the tax, or payment in lieu of tax, in question.
b. To the extent that a plant, property, or facility described in Section 40-9B-3(a)(10)e. is owned by a private user that is itself owned in whole or in part by one or more of the entities listed in paragraph c., then the private user shall be entitled to the abatement allowed under this section with a percentage limitation equal to the sum, for all owners, of the ownership interest percentage of each owner multiplied by the percentage limitation found in this subsection applicable to the owner for the tax, or payment in lieu of tax, in question.
c. The entities listed in this paragraph c. are:
1. A utility described in Section 37-4-1(7)a.;
2. An entity organized under Chapter 6 of Title 37; and
3. An authority both organized and existing pursuant to Chapter 50A of Title 11 and subject to the payments required to be made in lieu of ad valorem, sales, use, license, and severance taxes imposed by Section 11-50A-7.
(7) No abatement for mortgage and recording taxes, local noneducational ad valorem taxes, or local noneducational construction related transaction taxes shall be granted to a qualifying industrial or research enterprise described in Section 40-9B-3(a)(10)e., which is owned by a utility described in Section 37-4-1(7)a., except upon the approval of the abatement by the governing body of the county or municipality as provided in Section 40-9B-5(b).
(g) The abatements of ad valorem taxes and payments in lieu thereof allowed by amendments to this section by Act 2008-275 shall become effective for projects for which statements of intent are filed after December 31, 2011. No ad valorem taxes, or payments in lieu thereof, shall be abated for periods prior to January 1, 2012. The other abatements allowed by amendments made to this section by Act 2008-275 shall become effective after December 31, 2011.
(h) For a qualifying industrial or research enterprise described in Section 40-9B-3(a)(10)e., the approval of the abatement of a specific ad valorem tax or construction related tax levied or imposed by a county or municipality, or payments required to be made in lieu thereof, shall take effect only upon adoption of a resolution by the governing body of that county or municipality approving such abatement or abatements.
(Acts 1992, No. 92-599, p. 1239, §4; Act 2008-275, p. 402, §4; Act 2012-210, p. 351, §2; Act 2026-573, §1.)
Ala. Code § 40-9B-4.1 Availability of Incentives.
40-9B-4.1. Availability of Incentives.
In no event shall any incentive provided in Act 2012-210 be available to any company filing an application on or after July 31, 2032. Any project granted an incentive prior to July 31, 2032, shall be entitled to the incentive pursuant to the project agreement regardless of whether Act 2012-210 is reauthorized.
(Act 2012-210, p. 351, §3; Act 2018-475, §1; Act 2023-34, §2; Act 2026-573, §1.)
Ala. Code § 40-9B-5 Granting of Abatement.
40-9B-5. Granting of Abatement.
(a) Subject to the geographical or jurisdictional or other limitations specified in subsections (b), (c), and (d), the governing body of a municipality, a county, or a public industrial authority may grant abatements of all of the taxes allowed to be abated under Section 40-9B-4 with respect to private use industrial property.
(b)(1) The abatements authorized to be granted pursuant to subsection (a) for construction related transaction taxes and for ad valorem taxes for a period not to exceed 10 years may be granted:
a. By the governing body of a municipality, except as otherwise provided herein, with respect to private use industrial property located within the limits of the municipality or within the police jurisdiction of the municipality; provided, however, if a municipality has a corresponding municipal tax, the municipal governing body may only grant an abatement of a county tax if the municipality has also abated the corresponding municipal tax, or, if the municipality does not have a corresponding municipal tax, the municipal governing body may abate a county tax only if the governing body of the county, by resolution adopted by a majority of its members, has authorized the municipality to abate the eligible county tax described in the resolution.
b. By the governing body of a county, with respect to private use industrial property located in the county and not within a municipality or the police jurisdiction of a municipality, unless consented to by resolution of the governing body of the municipality.
c. By the governing body of a public industrial authority, except as otherwise provided herein, with respect to private use industrial property located within the jurisdiction of the public industrial authority; provided, however, if the municipality has a corresponding municipal tax, a municipal public industrial authority may grant an abatement of a county tax only if the municipal authority has also abated the corresponding municipal tax or, if the municipality does not have a corresponding municipal tax, the municipal authority may abate a county tax only if the governing body of a county, by resolution adopted by a majority of its members, has authorized the public industrial authority of the municipality to abate any eligible county tax described in the resolution.
(2) The abatements authorized to be granted pursuant to subsection (a) for ad valorem taxes for a period longer than 10 years may be granted:
a. By the governing body of a municipality, with respect to private use industrial property located within the limits of the municipality or within the police jurisdiction of the municipality, but only as to municipal noneducational taxes.
b. By the governing body of a county, with respect to private use industrial property located in the county, but only as to county noneducational taxes.
c. By the Governor, with respect to private use industrial property located in the state, but only as to state taxes.
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 its behalf.
(3) Notwithstanding the provisions of this subsection, abatements authorized to be granted pursuant to subsection (a) for data processing centers may be granted in accordance with subdivision (1) without regard to the time limitation stated in subdivision (1).
(c) If a tax is abated pursuant to this chapter, any payment, contribution, or other financial or in-kind award received from a private user or related party shall be divided between the county and municipality whose taxes were abated based upon the tax proceeds which would have been paid if the taxes had not been abated, unless the party receiving such award can prove that the award was not related to the granting of any abatement. In addition, any county or municipality whose taxes are subject to abatement as provided in this chapter, by resolution adopted by affirmative vote of a majority of its members, may elect to waive the requirements of this subsection.
(d) Any abatement of county taxes granted by a municipality or municipal industrial authority shall not be valid until the expiration of (1) 10 days following the date of physical delivery to the county commission or (2) 13 days following the date of mailing by certified mail to the county commission of a copy of the resolution granting such abatement. Proof of delivery by affidavit of service, in the case of physical delivery, or by certified mail receipt, in the case of mailing by certified mail, shall be furnished to the Department of Revenue at the same time as the filing of the abatement agreement under Section 40-9B-6. If the procedures herein prescribed are followed, any such abatement shall be effective as of the date granted.
(Acts 1992, No. 92-599, p. 1239, §5; Act 2002-265, p. 548, §1; Act 2006-578, p. 1520, §1; Act 2015-24, §3; Act 2016-403, §1; Act 2016-405, §1.)
Ala. Code § 40-9B-6 Procedure for Granting Abatement.
40-9B-6. Procedure for Granting Abatement.
(a) Any person who proposes to become a private user of industrial development property or of a major addition may apply to the governing body of any municipality, county, or public industrial authority, at or about the time that the private user is requesting inducement, for an abatement of all of the taxes allowed to be abated under Section 40-9B-4 with respect to such property. The application shall contain information that will permit the governing body to which it is submitted to make a reasonable cost/benefit analysis as to the proposed industrial development property and to determine the maximum exemption period for the abatement of noneducational ad valorem taxes.
(b) The abatements granted by the governing body shall be embodied in an agreement, which may be the same as the inducement, between the governing body and the private user, setting forth:
(1) The estimated amount of each abatement and the maximum exemption period.
(2) Good faith projections by the private user of: The amount to be invested; the number of individuals to be employed, initially and in the succeeding three years; and the payroll.
(c) The private user shall file with the Department of Revenue within 90 days after the granting of the abatements a copy of the agreement required by subsection (b), the contents of which the department shall use solely for its statistical and recordkeeping activities but shall otherwise keep confidential unless consented to in writing by the private user.
(Acts 1992, No. 92-599, p. 1239, §6; Act 2001-503, p. 886, §123.)
Ala. Code § 40-9B-7 Private Use Property; Taxation Thereof.
40-9B-7. Private Use Property; Taxation Thereof.
(a) Notwithstanding any other provision of law, if a public authority or county or municipal government has title to or a possessory right in private use property, then:
(1) The property shall be subject to ad valorem taxes as if the private user held title to the property.
(2) The private user of the property shall be liable for construction related transaction taxes as if the private user held title to such property.
(3) The private user of the property shall be subject to the recording taxes for mortgages, deeds, and documents relating to the issuance or securing of obligations and the conveyance of title to property into and out of a public authority.
(b) A private user of property described in subsection (a) may apply for, and if the property constitutes industrial development property, be granted abatements of ad valorem, construction related transaction taxes, and mortgage and recording taxes as described in Sections 40-9B-1 through 40-9B-6.
(c) The rule of subsection (a)(1) shall not apply to ad valorem taxes if a private user was entitled to use the property pursuant to a lease or other agreement entered into before May 21, 1992, or would be entitled to use the property at some future time pursuant to inducement entered into or adopted before May 21, 1992, provided, however, that this subdivision shall apply only to the property and the amount of capital expenditures set out in such inducement, subject to de minimis deviations.
(d) The rule of subsection (a)(2) shall not apply to construction related transaction taxes if a private user was entitled to use the property pursuant to a lease or other agreement entered into before May 21, 1992, or would be entitled to use the property at some future time pursuant to inducement entered into or adopted before May 21, 1992, provided, however, that this subdivision shall apply only to the property and the amount of capital expenditures set out in such agreement, subject to de minimis deviations.
(e) The rule of subsection (a)(3) shall not apply to mortgage and recording taxes with respect to property if a private user was entitled to use the property pursuant to a lease or other agreement entered into before May 21, 1992, or would be entitled to use the property at some future time pursuant to inducement entered into or adopted before May 21, 1992, provided, however, that this subdivision shall apply only to the property specified in such agreement, subject to de minimis deviations.
(Acts 1992, No. 92-599, p. 1239, §7.)
Ala. Code § 40-9B-8 Certain Purchases of Tangible Personal Property Used in Constructing Industrial Development Property Exempted.
40-9B-8. Certain Purchases of Tangible Personal Property Used in Constructing Industrial Development Property Exempted.
Notwithstanding any other laws and subject to the limitations set out in Section 40-9B-5, the gross proceeds of the sale to, or the storage, use, or consumption by, any contractor of any tangible personal property to be incorporated into a private use industrial development property or major addition for which a private user is granted a valid abatement of construction related transaction taxes pursuant to this chapter shall be exempt from all state and local sales and use taxes, except those county and municipal sales and use taxes levied for educational purposes or for capital improvements for education. This exemption shall not apply to any purchases of tangible personal property by a contractor which would not also be exempt if purchased by a private user who has been granted a valid abatement of construction related transactions taxes pursuant to this chapter. The definitions contained in Section 40-9B-3 are incorporated by reference herein.
(Act 98-600, p. 1313, §1; Act 2002-265, p. 548, §1.)
Ala. Code § 40-9B-9 Approval Required for Certain Abatements.
40-9B-9. Approval Required for Certain Abatements.
With respect to industrial development property for the establishment or expansion of an industrial or research enterprise as defined in paragraph b. of subdivision (10) of Section 40-9B-3, the governing body of a municipality, county, or public industrial authority shall not grant the abatements provided for in this chapter without first receiving the written approval of the Governor, Finance Director, and Director of the Alabama State Port Authority.
(Act 2001-503, p. 886, §14.)
Ala. Code § 40-9B-10 Applicability to Certain Trades or Businesses Engaged in Postharvest Processing of Peanuts.
40-9B-10. Applicability to Certain Trades or Businesses Engaged in Postharvest Processing of Peanuts.
Beginning April 1, 2003, a trade or business in counties with populations under 30,000 engaged in the postharvest processing of peanuts described in the 1987 Standard Industrial Classification Manual, or its successor, shall constitute an industrial or research enterprise for only purposes of this chapter related to state and local taxes that do not fund public education and such trade or business, and the property thereof, shall be eligible for the abatement of taxes in accordance with this chapter but in no event shall such trade or business, and the property thereof, be eligible for the abatement of any state or local taxes that support public education.
(Act 2003-503, p. 1523, §1.)
Ala. Code § 40-9B-11 Exemption Period for Qualified Industrial or Research Enterprises.
40-9B-11. Exemption Period for Qualified Industrial or Research Enterprises.
(a) Effective October 1, 2011, the maximum exemption period for a qualifying industrial or research enterprise described in paragraph e. of subdivision (10) of subsection (a) of Section 40-9B-3, which is owned by a utility described in Section 37-4-1(7)a., shall be 10 years applied as follows:
(1) With respect to land, the abatement shall begin with the first October 1 lien date following commencement of the project, and the abatement shall be for a total of 10 years.
(2) With respect to each portion of real property construction work in progress which was not taxable on the prior October 1 lien date, the abatement for the portion shall begin with the first October 1 lien date on which the construction work in progress becomes taxable, and the abatement shall be for a total of 10 years.
(3) With respect to each item of tangible personal property, the abatement shall begin with the first October 1 lien date on which the item of tangible personal property becomes taxable, and the abatement shall be for a total of 10 years.
(b) Effective October 1, 2011, the maximum exemption period for a qualifying industrial or research enterprise described in paragraph e. of subdivision (10) of subsection (a) of Section 40-9B-3 which is owned by an entity organized under Chapter 6 of Title 37, or by an authority both organized and existing pursuant to Chapter 50A of Title 11, and subject to the payments required to be made in lieu of ad valorem, sales, use, license, and severance taxes imposed by Section 11-50A-7, shall be 20 years applied as follows:
(1) With respect to land, the abatement shall begin with the first October 1 lien date following commencement of the project, and the abatement shall be for a total of 20 years.
(2) With respect to each portion of real property construction work in progress which was not taxable on the prior October 1 lien date, the abatement for that portion shall begin with the first October 1 lien date on which the construction work in progress becomes taxable or subject to payments required to be made in lieu of taxes, and the abatement shall be for a total of 20 years.
(3) With respect to each item of tangible personal property, the abatement shall begin with the first October 1 lien date on which the item of tangible personal property becomes taxable or subject to payments required to be made in lieu of taxes, and the abatement shall be for a total of 20 years.
(c) The abatements of ad valorem taxes and payments in lieu thereof allowed by Act 2008-275 shall become effective for projects for which statements of intent are filed after December 31, 2011, and any such abatements shall be granted for 10 years. No ad valorem taxes or payments in lieu thereof shall be abated for periods prior to January 1, 2012. The other abatements allowed by Act 2008-275 shall become effective after December 31, 2011.
(Act 2008-275, p. 402, §5.)
Ala. Code § 40-9B-12 Availability of Abatements After December 31, 2018.
40-9B-12. Availability of Abatements After December 31, 2018.
The tax abatements and abatements of payments in lieu of taxes authorized by the amendments to Sections 40-9B-3, 40-9B-4, and 40-9B-11 by Act 2008-275 shall not be available for new industrial or research enterprises described in Section 40-9B-3(a)(10)e. after December 31, 2018, unless the Legislature votes to continue or reinstate the abatements of state taxes for new industrial or research enterprises described in Section 40-9B-3(a)(10)e. after that date. No action or inaction on the part of the Legislature shall reduce, suspend, or disqualify any abatement in any past or future year with respect to any qualifying industrial or research enterprises described in Section 40-9B-3(a)(10)e. which files with the Department of Revenue, on or before December 31, 2018, a statement of intent as defined in Section 40-9B-3(a)(23). The failure of the Legislature to vote to continue or reinstate the capital credit for new projects after December 31, 2018, shall affect only the availability of the abatements to new qualifying industrial or research enterprises described in Section 40-9B-3(a)(10)e. after that date and shall not affect either the qualifying industrial or research enterprises described in Section 40-9B-3(a)(10)e. which have established their eligibility to receive abatements by filing the statement of intent, on or before December 31, 2018, or any future qualifying major additions to such qualifying industrial or research enterprises described in Section 40-9B-3(a)(10)e.
(Act 2008-275, p. 402, §12.)
Ala. Code § 40-9B-13 Disaster Recovery Tax Incentive Protection.
40-9B-13. Disaster Recovery Tax Incentive Protection.
(a) This section shall be known as the Disaster Recovery Tax Incentive Protection Act of 2011.
(b) For the purposes of this section, the following terms shall have the following meanings:
(1) DISASTER REPLACEMENT PROPERTY. Private use industrial property obtained by a private user to repair or replace private use industrial property on which tax abatements were in existence at the time of a natural disaster, that was damaged or destroyed by the natural disaster.
(2) GOVERNING BODY. The governing body of a municipality, a county, or a public industrial authority which may grant tax abatements with respect to private use industrial property under Section 40-9B-4, subject to the geographical or jurisdictional or other limitations of Section 40-9B-5.
(3) NATURAL DISASTER. A catastrophe caused by nature, or regardless of cause, a fire, flood, or explosion, which is declared by the President of the United States or the Governor of the State of Alabama to be a major disaster.
(4) REPLACED PROPERTY. Private use industrial property that was damaged or destroyed by a natural disaster, and on which tax abatements were in existence at the time of the disaster.
(c) Tax abatements that may otherwise be granted pursuant to this chapter shall not be subject to disqualification solely because the underlying transactions or property relate to the repair or replacement of property damaged by a natural disaster and not to new construction. This expansion of Alabama’s abatement law applies to transactions entered into or property acquired after the tornado outbreaks of April 2011. Ad valorem tax abatements in existence prior to the onset of a natural disaster, shall not be disallowed due to an interruption of a qualifying business activity at the site directly attributable to the natural disaster.
(d) Any tax abatements granted on replaced property shall continue to apply to disaster replacement property obtained by a private user if any of the following conditions are met:
(1) Where such disaster replacement property is located at a different site than the replaced property, but not within the jurisdiction of a different governing body, then no new approval of the governing body shall be required to transfer the previously granted tax abatements on the replaced property to the disaster replacement property so long as the cost of the disaster replacement property does not exceed the cost of the replaced property by more than 25 percent. However, the private user shall provide written notice to the abatement granting authority, to the assessing official of the county where the property is located, and to the Department of Revenue of the change in location of the private use industrial property or the disaster replacement property not later than October 1, 2012, or the first October 1 following the change in location of such property, whichever is later. The user shall also file the appropriate tax returns on October 1 of that year and each year thereafter, as required by law.
(2) Where disaster replacement property is located within the jurisdiction of a governing body different from the replaced property, then the private user shall obtain the approval from the appropriate governing body for the continuation of the ad valorem tax abatement, with such approval to be requested in accordance with Sections 40-9B-5 and 40-9B-6.
(3) If the cost of the disaster replacement property exceeds the cost of the replaced property by more than 25 percent, then the private user shall obtain governing body approval under the procedures outlined in Sections 40-9B-5 and 40-9B-6 for the abatement of any taxes on the amount of the investment that is greater than 25 percent more than the cost of the replaced property. No new approval is required on the amount of the new investment not greater than 25 percent more than the cost of the replaced property, provided that no new governing body is affected by such continuation of the tax abatements.
(Act 2011-709, p. 2191, §§1, 2(a); Act 2012-524, p. 1552, §1.)
Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026