SB368 Alabama 2012 Session

Summary

Primary Sponsor

Cam Ward

Republican

Co-Sponsors

Del MarshPaul SanfordArthur OrrBill HoltzclawTom WhatleyMark 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

SB368 would create a limited Alabama tax credit for qualified research expenses to encourage R&D by businesses and financial institutions, with higher credits when universities or research institutions participate, and credits that can pass through to owners of pass-through entities.

What This Bill Does

It offers a credit against Alabama state income tax and against the financial institution excise tax for qualified research expenses incurred in Alabama. The credit is 6.5% of QREs, or 15% if the QRE is part of a university research contract, and it is nonrefundable with a $100,000 per-taxpayer or per-pass-through-entity annual cap. Unused credits can be carried forward up to 10 years, and QREs must be incurred in Alabama; credits are enhanced when University Research Contracts are involved. For pass-through entities, the credit is allocated to owners (individuals or corporate taxpayers) and can be used on their respective tax liabilities, with an option to treat a portion as a nonrefundable estimated tax payment.

Who It Affects

• Businesses and financial institutions operating in Alabama that incur qualified research expenses and would be eligible for a credit against their state taxes (income tax or financial institution excise tax).
• Owners and beneficiaries of pass-through entities (such as individuals, S corporations, partnerships, trusts, and estates) who would receive and apply their share of the QRE credit against their personal or corporate tax liabilities.

Key Provisions

• Establishes a limited R&D tax credit for QRE incurred in Alabama against state income tax and financial institution excise tax.
• Credit rate set at 6.5% of QREs, with a 15% credit if QREs are incurred under a University Research Contract with an Alabama university, HAIB, or SRI.
• Credits are nonrefundable and must be claimed in the tax year the taxpayer qualifies; other state credits are applied first, and any unused credit can be carried forward up to 10 years.
• Individual and pass-through allocations allow the QRE credit to flow to owners, partners, members, or beneficiaries for various tax types (individual or corporate), with a $100,000 per-taxpayer or per-pass-through entity cap.
• University Research Contract QREs must be performed in Alabama and involve at least one eligible university or research institution; research outside Alabama or in a foreign country does not qualify.
• An annual election option lets eligible recipients treat part of the credit as a nonrefundable estimated tax payment, subject to the same limits as the credit itself.
• Effective for taxable years beginning after December 31, 2012.

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