SB247 Alabama 2012 Session

Summary

Primary Sponsor

J.T. WaggonerSenator

Republican

Co-Sponsors

Greg J. ReedMark Slade Blackwell

Session

Regular Session 2012

Title

Income tax credit for qualified research and development expenses for financial institutions and businesses, including owners of pass-through businesses, authorized, Secs. 40-18-280, 40-18-281 added; Sec. 40-16-8 am'd.

Summary

SB247 would create state tax credits in Alabama for qualified research expenses by businesses and financial institutions, including owners of pass-through entities, modeled after the federal R&D credit.

What This Bill Does

It authorizes a credit against Alabama's state income tax or financial institution excise tax for qualified research expenses incurred in-state. The credit rate is 6.5% of the QRE, or 15% if the QRE is incurred as part of a university research contract. The credit is nonrefundable and can be carried forward up to 10 years, with other state credits applied first. It also allows pass-through entities to allocate the credit to their owners (individuals, S corporations, partnerships, trusts, etc.) so owners can claim the benefit on their own tax returns.

Who It Affects

• Businesses that incur qualified research expenses in Alabama would be eligible for a state tax credit against their income tax, reducing their tax liability.
• Financial institutions in Alabama would be eligible for the credit against the financial institution excise tax, reducing that tax liability.
• Owners of pass-through entities (such as owners of LLCs, partnerships, and S corporations) would receive the credit allocated to them and claimed against their individual or corporate taxes.
• Universities and researchers involved in in-state sponsored research contracts could trigger a higher 15% credit on QRE under those contracts.

Key Provisions

• Defines qualified research expenses (QRE) as in-state R&D costs under IRS Section 41 and includes university-sponsored contracts performed in Alabama, with definitions for University Research Contracts.
• Provides a credit against state income tax or financial institution excise tax equal to 6.5% of QRE in-state; credit increases to 15% of QRE if part of a university research contract; credits are nonrefundable and can be carried forward up to 10 years; other state credits are applied before this credit.
• Adds Article 11 (40-18-280 to 40-18-281) detailing pass-through treatment: owners of pass-through entities receive credits allocated to them based on ownership type (individuals, S corporations, partnerships, trusts, etc.) and the credits apply against appropriate taxes; the total credit cannot exceed the amount otherwise due; unused credits may be carried forward for up to 10 years; taxpayers may elect to treat their share as a nonrefundable estimated tax payment.
• Effective date: the act takes effect on the first day of the third month after its passage and approval (or when it becomes law).

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