HB257 Alabama 2012 Session

Summary

Primary Sponsor

Yvonne Kennedy

Democrat

Co-Sponsors

James E. BuskeyRandy DavisChad FincherJamie IsonJim Barton

Session

Regular Session 2012

Title

Taxation, state income tax credit for investments, businesses in impoverished and low income communities.

Summary

HB257 creates state income, financial institution excise, and premium tax credits for investments in impoverished and low-income communities in Alabama through qualified community development entities.

What This Bill Does

It designates low-income areas in Alabama under the federal 45D standard and establishes the Alabama New Markets Development Act. It offers a total 50% credit on a qualified equity investment, paid across seven credit allowance dates (0% for the first date and 8.33% for the next six dates). It caps total credits certified at $20 million per tax year, requires 85% of the purchase price to be invested in Alabama within 12 months, and imposes recapture rules, reporting duties, and an exclusion for landfills.

Who It Affects

• Qualified community development entities (QCDEs) and investors who make qualified equity investments or long-term debt securities and may receive state tax credits, subject to certification, caps, and recapture provisions.
• Businesses located in qualified active low-income communities and their workers in Alabama, who may benefit from investment, job creation, and related reporting requirements.

Key Provisions

• Establishes the Alabama New Markets Development Act to provide state income, financial institution excise, and premium tax credits for investments in low-income communities.
• Credit structure: total credits equal 50% of the qualified equity investment purchase price, with 0% on the first credit allowance date and 8.33% on the next six dates; credits are non-transferable and may be allocated to partners in pass-through entities.
• Annual credit cap: the department may certify qualified equity investments up to $20,000,000 in tax credits for any given tax year.
• Investment requirements: 85% of the purchase price must be used to make qualified low-income investments in Alabama within 12 months; investments must be long-term debt with at least seven years to maturity and no cash interest payments exceeding operating income during the specified period.
• Eligibility and certification: QCDEs must be certified by the department and have an allocation agreement with the Community Development Financial Institutions Fund; applicants must file a detailed application and pay a $5,000 fee; the department has defined review and certification timelines.
• Recapture provisions: recapture can occur if federal credits under Section 45D are recaptured, if 85% investment is not maintained in Alabama, or if the issuer redeems before the seventh anniversary; recaptured credits can be reallocated to other taxpayers, subject to conditions.
• Reporting requirements: issuers must report third and sixth anniversaries on jobs created, payroll, and other economic data; the department may require additional information and audits.
• Real estate appraisal requirement: if investment funds real estate, an independent MAI appraiser must appraise improvements and the taxing authority must adjust ad valorem taxes accordingly.
• Exclusions: landfill or dump projects cannot qualify for credits.
• Effective date: the act becomes law on the first day of the third month after enactment.

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

Subjects

Taxation