HB40 Alabama 2013 Session

Summary

Primary Sponsor

Jack Williams

Republican

Session

Regular Session 2013

Title

Tax credit, investment in Alabama entrepreneurial business

Summary

HB40 would create an Early Stage Investment Tax Credit to encourage investment in Alabama entrepreneurial businesses by qualified investors.

What This Bill Does

It creates an Early Stage Investment Credit Program run by the Alabama Department of Commerce. It offers a refundable tax credit equal to 50% of the investment in an Alabama entrepreneurial business, paid over five years, with a per-business yearly cap of $100,000 and a total annual credit cap of $10,000,000. The credit is transferable and can be claimed on various tax returns (individual, corporate, fiduciary, or through partners), using a Department of Commerce-issued tax credit voucher. It also sets eligibility criteria for businesses and investments and requires rules and annual reporting by recipient businesses.

Who It Affects

• Qualified investors (individuals, businesses, estates, or trusts) who invest in an Alabama entrepreneurial business and can claim a 50% tax credit over five years up to $100,000 per year per business, subject to the $10 million annual cap.
• Alabama entrepreneurial businesses that meet the defined criteria and receive qualified investments, which can help with capital for growth and development but must use proceeds for approved purposes and meet restrictions on use of funds.
• The Alabama Department of Commerce, which administers the program, certifies eligibility, issues tax credit vouchers, and requires annual reporting from recipient businesses.
• Taxpayers generally, who may receive a tax credit against their state tax liabilities and see an additional funding pathway for eligible investments, with credits transferable and carryable for up to 10 years.

Key Provisions

• ALABAMA ENTREPRENEURIAL BUSINESS defined by criteria: domiciled in Alabama, ≤20 full-time employees, < $500,000 gross revenues prior year, ≤$1,000,000 funding raised (excluding certain loans), not in excluded industries, <3 years in business, principal operations in Alabama, and is early stage/innovative.
• Qualifying investment must be at risk, not secured or guaranteed, not funded via other Alabama incentive programs unless approved, and cannot be made by principal owners who are full-time operators of the business; family ownership is considered for control.
• Use of investment proceeds limited to capital improvements, equipment, R&D, working capital, or other approved activities; funds cannot be used to pay dividends or repay debt without approval.
• Tax credits: 50% of the invested amount, evenly over five years; up to $100,000 credit per year per business; annual aggregate cap of $10,000,000; issued as vouchers attached to tax returns; credits are transferable and may be carried forward 10 years.
• Administration and reporting: Department of Commerce issues credits, maintains voucher lists, and requires annual reports from recipient businesses on use of funds, employment, wages, revenue, jobs created, and investors.
• Effective date: provisions apply to tax year beginning January 1, 2014.

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

Subjects

Tax Credits