HB478 Alabama 2011 Session

Summary

Primary Sponsor

Mark Tuggle

Republican

Co-Sponsors

April WeaverPaul W. LeeLynn GreerWilliam RobertsTerri CollinsKerry RichK.L. BrownRod ScottBarry MooreEd HenryWes LongBill PooleMike JonesKen JohnsonJohn MerrillDonnie ChesteenMac ButtramBecky NordgrenRichard BaughnAlan BootheRichard J. LairdHarry ShiverJoe HubbardMike BallJay LoveGregory CanfieldRandy DavisLesley VanceAlan HarperJoe FaustChad FincherAlan BakerBlaine GalliherGreg WrenMicky HammonPhil WilliamsDuwayne BridgesBarry MaskSteve ClouseJamie IsonMike Millican

Session

Regular Session 2011

Title

Economic development, tax incentives authorized to certain companies and educational institutions for locating new or expanding business in state, or a retention project, capital investment and job requirements, Alabama Development Office and Revenue Department to recommend to Governor, Industrial Development Authority to approve project for incentive (2011-20902)

Summary

HB478 creates a state withholding tax incentive program for Alabama projects, letting approved entities keep a portion of state income taxes from eligible employees to recruit, retain, or expand business and educational activities in the state.

What This Bill Does

It authorizes withholding incentives ranging from 1% to 90% for new or expansion projects, or 1% to 75% for retention projects, based on a qualifying project agreement. The process requires review by the Alabama Development Office and Department of Revenue, and final approval by the State Industrial Development Authority after recommendations from the Governor. The total incentives plus any capital credits cannot exceed 100% of the project’s capital costs, and the incentive period can last up to 20 years. Employees see a personal tax credit equal to the amount of incentives withheld from their wages.

Who It Affects

• Approved entities (companies and educational institutions) undertaking qualifying projects in Alabama, who may receive withholding incentives on eligible employees, subject to capital cost limits and minimum job/capital requirements and final approval by the State Industrial Development Authority.
• Eligible employees who work on qualifying projects, who may receive a personal tax credit equal to the withholding incentives retained by their employer.

Key Provisions

• Establishes withholding incentives for approved projects: 1%-90% of state income taxes withheld for new/expansion projects; 1%-75% for retention projects.
• Approval process: ADO Director and Commissioner of Revenue recommend to the Governor; Governor recommends to the State Industrial Development Authority, which approves in writing.
• Cap and period: total withholding incentives plus capital credits cannot exceed 100% of the qualifying project's capital costs; incentive period up to 20 years after the project is placed in service.
• Eligible employees: workers paid by the approved entity for the qualifying project, working at least 36 hours per week, and reported to IRS/State agencies as required.
• Employee credit: individuals receive a state tax credit equal to 100% of the withholding incentives their employer retains.
• Reporting and verification: quarterly certification of eligible employees and payroll; Department of Industrial Relations verifies; Department of Revenue may audit.
• Capital costs and qualifying projects: defines capital costs and lists project types (HQ facility, data processing center, R&D facility, qualified educational facility, and other activities meeting criteria).
• Retention thresholds: for retention projects, capital costs must be at least $2,000,000 (outside favored area) or $500,000 (in a favored area).
• Revenue-neutral intent: act is designed so employee withholdings and refunds remain revenue-neutral for the state.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Economic Development