HB73 Alabama 2010 Session

Summary

Primary Sponsor

Mike Ball

Republican

Session

Regular Session 2010

Title

Income tax, research and development tax credit based on federal income tax credit, Sec. 40-18-180 added

Summary

Alabama creates a new income tax credit for research and development activities in the state, phased in to 20% of the federal R&D credit over five years.

What This Bill Does

The bill adds an Alabama R&D credit equal to 20% of the federal R&D credit attributable to Alabama activities, usable against Alabama income tax starting with tax years after 2010. The credit phases in over five adjustment years: 4% in the first year, then 8%, 12%, 16%, and 20% in the final year. Phasing requires Finance to certify that the Education Trust Fund will grow by at least 3% for the next year; Revenue then implements the credit based on that certification. Only taxpayers who qualify for the federal R&D credit can claim the Alabama credit.

Who It Affects

• Businesses that conduct qualified research in Alabama and qualify for the federal R&D credit (they can claim up to 20% of their federal credit as Alabama credit).
• Alabama Department of Finance and Department of Revenue, which certify ETF growth and implement the credit.
• Education Trust Fund (ETF), whose projected growth triggers the phased in credit.

Key Provisions

• Adds Section 40-18-180 establishing the Alabama Research and Development income tax credit.
• The Alabama credit equals 20% of the federal R&D credit attributable to Alabama activities and is used against the Alabama income tax (Chapter 18, Title 40).
• The credit is phased in over five adjustment years: 4% (year 1), 8% (year 2), 12% (year 3), 16% (year 4), and 20% (year 5).
• Phasing depends on Finance certifying at least 3% estimated ETF growth for the next year; certification due by the second legislative day of each regular session, after which Revenue implements the credit.
• Effective for tax years beginning on or after January 1, 2011.
• The act is severable and overrides conflicting laws where applicable.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation