Ala. Code § 40-18-530 Short Title.
40-18-530. Short Title.
This article shall be known and may be cited as the Alabama Workforce Housing Tax Credit Act.
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(Act 2024-302, §1.)
Alabama Workforce Housing Tax Credit Act.
Ala. Code tit. 40, ch. 18, art. 27
in effectAla. Code § 40-18-531 Tax Credit for Qualified Workforce Housing Projects.
40-18-531. Tax Credit for Qualified Workforce Housing Projects.
Regarding the adoption of qualified allocation plans as they relate to the workforce housing tax credit by the authority, the authority shall incentivize and prioritize four percent qualified projects, or in the case of awards under Section 40-18-533(f), qualified projects in areas identified by the Department of Commerce concerning its priorities for the location and type, including new construction, rehabilitation, or both, of multifamily housing which will support economic development efforts and the creation of stable, good-paying jobs in the State of Alabama. It is the desire of the Legislature that the efforts of the Department of Commerce in seeking to create jobs will be generally supported by the creation of multifamily rental housing opportunities supported by the workforce housing tax credit.
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(Act 2024-302, §2.)
Ala. Code § 40-18-532 Definitions.
40-18-532. Definitions.
For the purposes of this article, the following terms have the following meanings:
(1) ALABAMA TAX LIABILITY. The taxes otherwise due under Sections 27-3-29, 27-4A-3, 40-16-4, or 40-18-2.
(2) AUTHORITY. The Alabama Housing Finance Authority or its successor authority or agency.
(3) AWARD. The issuance by the authority of either of the following:
a. A reservation letter pursuant to the qualified allocation plan.
b. A determination letter for workforce housing tax credits to a qualified project during an award cycle, the amount of which award shall be claimed in each year of the credit period.
(4) AWARD CYCLE. Each fiscal year or other 12-month period designated by the authority over which the authority awards workforce housing tax credits to qualified projects.
(5) AWARD CYCLE CAP. The sum of all of the following:
a. Five million dollars ($5,000,000) for each year of the 10-year credit period as defined in 26 U.S.C. § 42(f)(1). Any funds not awarded may be carried forward to the next award cycle.
b. The amount, if any, by which the award cycle cap prescribed by this article for the preceding award cycle exceeds the workforce housing tax credits awarded by the authority in that award cycle.
c. The amount of workforce housing tax credits recaptured or otherwise disallowed under Section 40-18-533(e) in the preceding fiscal year.
(6) CREDIT PERIOD. The 10-year credit period as defined in 26 U.S.C. § 42(f)(1), subject to the special rule for the first year of the credit period as set forth in 26 U.S.C. § 42(f)(2).
(7) DEPARTMENT. The Alabama Department of Revenue, or its successor agency.
(8) ELIGIBILITY CERTIFICATE. A certificate issued by the authority to the owner of a qualified project certifying that the project is a qualified project that qualifies for the workforce housing tax credit authorized by this article and specifying the annual amount of workforce housing tax credits that may be claimed in each year of the credit period. The authority shall issue an eligibility certificate to a qualified project upon the authority’s approval of a final cost certification that complies with the authority’s requirements.
(9) FEDERAL LOW-INCOME HOUSING TAX CREDIT or FEDERAL TAX CREDIT. The federal tax credit as provided in 26 U.S.C. § 42.
(10) FOUR PERCENT QUALIFIED PROJECT. A qualified project that is eligible for federal low-income housing tax credits pursuant to 26 U.S.C. § 42(h)(4).
(11) MULTIFAMILY HOUSING REVENUE BOND POLICY. The authority’s policy, as amended from time to time, regarding the allocation of tax-exempt bond volume cap for affordable multifamily housing.
(12) QUALIFIED ALLOCATION PLAN. As defined in 26 U.S.C. § 42(m)(1)(B), subject to additions and modifications necessary to implement this article.
(13) QUALIFIED PROJECT. A qualified low-income building, as defined in 26 U.S.C. § 42(c)(2), that is located in the state, is eligible for the federal low-income housing tax credit, and is placed in service on or after January 1, 2025.
(14) QUALIFIED TAXPAYER. A taxpayer owning an interest, directly or indirectly, through one or more pass-through entities, in a qualified project at any time prior to filing a tax return claiming a workforce housing tax credit.
(15) TAXPAYER. An individual, corporation, S corporation, partnership, limited partnership, limited liability partnership, limited liability company, joint venture, financial institution, fiduciary of an estate of a trust, or insurer.
(16) WORKFORCE HOUSING TAX CREDIT or TAX CREDIT. The tax credit created by this article.
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(Act 2024-302, §3.)
Ala. Code § 40-18-533 Applications and Awards; Allocation; Nonrefundability; Recapture.
40-18-533. Applications and Awards; Allocation; Nonrefundability; Recapture.
(a)(1) For applications for federal tax credits submitted to the authority on and after January 1, 2025, the authority, upon approving a federal low-income housing tax credit for a qualified project pursuant to the authority’s qualified allocation plan or multifamily housing revenue bond policy, may award a workforce housing tax credit under this article to the owner of the qualified project so long as doing so will not result in exceeding the award cycle cap prescribed by this subsection. The workforce housing tax credit shall be in an amount determined by the authority to be necessary for the financial feasibility of the qualified project and consistent with the qualified allocation plan and multifamily housing revenue bond policy, as applicable, but the annual award for each qualified project shall not be greater than two million dollars ($2,000,000).
(2) The authority shall send written notice of the award to the owner of the qualified project. The award notice shall state the amount of workforce housing tax credit awarded for each year of the qualified project’s credit period and stipulate that receipt of the tax credit is contingent upon issuance of an eligibility certificate.
(3) Upon issuance of an eligibility certificate, a copy of which shall be provided to the department and the Alabama Department of Insurance, a workforce housing tax credit shall be allowed for the qualified project for each year of the credit period in the amount specified in the eligibility certificate.
(4) The total amount of tax credit awards made by the authority under this article in each award cycle shall not exceed the award cycle cap.
(b)(1) The tax credit may be allocated by pass-through entities to some or all of its partners, members, or shareholders, including any not-for-profit entity that is a partner, member, or shareholder, in any manner agreed to by such persons, regardless of whether or not the person is allocated or allowed any portion of any federal low-income housing tax credit with respect to the qualified project, whether the allocation of the tax credit under the terms of the agreement has substantial economic effect within the meaning of 26 U.S.C. § 704(b), and whether the person is deemed a partner for federal income tax purposes as long as the partner or member would be considered a partner or member under applicable state law governing such entity, and has been admitted as a partner or member on or prior to the date for filing the qualified taxpayer’s tax return, including any amendments thereto, with respect to the year of the tax credit. Such pass-through entities or qualified taxpayer may assign all or any part of its interest, including its interest in the tax credits, to one or more pass-through entities or qualified taxpayers, and the qualified taxpayer shall be able to claim the tax credit so long as its interest is acquired prior to the filing of its tax return claiming the tax credit.
(2) If the tax credit is used to offset the financial institution excise tax, the offset shall be limited to the state portion of the financial institution excise tax.
(c) The workforce housing tax credit authorized by this article shall not be refundable. Any tax credit not used in a taxable year may be carried forward by a qualified taxpayer for the succeeding five years.
(d) Prior to filing the tax return, or in the case of pass-through entities, prior to passing the credit to the qualified taxpayer, a project owner that has been awarded a workforce housing tax credit shall submit a copy of the eligibility certificate to the department in a manner prescribed by the department.
(e) If under 26 U.S.C. § 42, a portion of any federal low-income housing credits taken on a qualified project is required to be recaptured or is otherwise disallowed during the credit period, the qualified taxpayer claiming workforce housing tax credits with respect to the qualified project shall also be required to recapture a portion of any tax credits authorized by this article. The percentage of workforce housing tax credits subject to recapture shall be equal to the percentage of federal low-income housing credits subject to recapture or otherwise disallowed during such period. Any tax credits recaptured or disallowed shall increase the income tax liability of the qualified taxpayer who claimed the tax credits in a like amount and shall be included on the tax return of the qualified taxpayer submitted for the taxable year in which the recapture or disallowance event is identified. The owner of the qualified project shall report any recapture event to the department, the Department of Insurance, the authority, and, in the same manner done for the recapture of federal low-income housing credits, the qualified taxpayer, if the project owner is not the qualified taxpayer.
(f) For each award cycle, the authority shall award at least 20 percent, but not more than 25 percent, of the award cycle cap to qualified projects located in areas designated as rural by the authority, subject to viable requests being received. The authority shall award the balance of the remaining available award cycle cap to four percent qualified projects without any geographic limitation.
(g) An insurance company claiming a workforce housing tax credit against the taxes, licenses, and other fees, fines, and penalties imposed, including any retaliatory tax imposed on insurance companies by Section 27-3-29, shall not be required to pay any additional tax as a result of claiming the tax credit. The workforce housing tax credit may fully offset any retaliatory tax imposed by the Code of Alabama 1975. A reduction in the taxes of a foreign insurance company to the extent obtained through a claim for credit under this article does not increase the retaliatory tax liability otherwise charged against that company.
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(Act 2024-302, §4.)
Ala. Code § 40-18-534 Administration of Workforce Housing Tax Credit Program.
40-18-534. Administration of Workforce Housing Tax Credit Program.
The authority shall administer the workforce housing tax credit program and shall adopt the guidelines and qualified allocation plans necessary to implement and administer this article consistent with federal law provided in 26 U.S.C. § 42. The qualified allocation plan shall provide a preference for applications in which there is a commitment for: (i) a furnished children’s activity center which will be made available at no cost to a licensed, qualified, and insured childcare provider for after-school care for children in grades K through 8 residing at the qualified project during ordinary school days from 2:30 p.m. to 6:00 p.m.; or (ii) the qualified project owner shall subsidize the cost of after-school care for children grades K through 8 residing at the qualified project for at least three years from the placed in service date, by the lesser of one thousand dollars ($1,000) per year per unit occupied by a student participating in the after-school program or fifty thousand dollars ($50,000) per annum. The authority shall permit reserves to be established from project sources to fund such subsidy costs. The workforce housing tax credit authorized by this article shall not be available to taxpayers that submit an application for federal low-income housing tax credits for a qualified project after September 30, 2027. No action or inaction on the part of the Legislature shall reduce or suspend the tax credits authorized by this article in any past or future calendar year with respect to a qualified project if the application to the authority was substantially complete on or prior to September 30, 2027, even if the award is made after such date, the qualified project is placed in service after September 30, 2027, or the first workforce housing credits are available to the qualified taxpayer after September 30, 2027.
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(Act 2024-302, §5.)
Ala. Code § 40-18-535 Timing; Reporting Requirements; Rulemaking Authority.
40-18-535. Timing; Reporting Requirements; Rulemaking Authority.
(a) The tax credit created pursuant to this article may only be claimed with respect to taxable years beginning on or after January 1, 2025. The tax credit provided in this article shall be subject to the reporting requirements of Section 40-1-50.
(b) The department and the Alabama Department of Insurance may adopt rules for the administration of this article.
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(Act 2024-302, §6.)
Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026