HB414 Alabama 2015 Session

Summary

Primary Sponsor

Ken Johnson

Republican

Session

Regular Session 2015

Title

Small Business Act, tax credits for small business employers authorized under certain conditions, Secs. 40-18-290 to 40-18-293, inclusive, repealed; Sec. 40-18-321 am'd.

Summary

HB414 creates an Alabama Small Business Jobs Act that offers a tax credit to small employers for hiring qualified new Alabama workers, adds a veteran bonus, and repeals the Full Employment Act of 2011.

What This Bill Does

It establishes a tax credit program for Alabama small business employers (50 or fewer employees) for each qualified new full-time employee who completes 12 months of work. The base credit is $1,250 per qualified new employee, with an additional $1,000 credit for recently deployed unemployed veterans, potentially totaling $2,250 per employee if all criteria are met. Employers must show net Alabama employee growth at year-end that covers current year credits plus prior year credits. Credits apply against state income taxes (and certain business taxes for specific entities), are non-refundable, and can be carried forward up to 3 years; they apply to hires after January 1, 2016. The bill repeals the Full Employment Act of 2011 and adds veteran-related provisions by amending existing tax credit rules and definitions, with rulemaking authority granted to the Department and an effective date 90 days after passage.

Who It Affects

• Alabama small business employers (50 or fewer employees) that hire qualified new full-time employees and meet net growth requirements, who could claim a per-employee tax credit.
• Qualified new employees (and recently deployed unemployed veterans) who must be full-time, Alabama residents, earn at least $40,000, and not have been full-time with the same employer in the prior 12 months to qualify for the credit.
• Financial institutions and owners/members of pass-through entities taxed under S or K; they have a pro rata credit, with applicable limitations and non-refundability.
• Municipalities and counties, which are protected from reduced distributions due to the credit via department regulations.

Key Provisions

• Defines Alabama small business employer as a business in Alabama with 50 or fewer employees (excluding new hires for which the credit is allowed).
• Provides a one-time tax credit of $1,250 for each qualified new employee who completes 12 months of consecutive full-time employment.
• Requires net employee growth at the end of each tax year to be at least equal to the number of current-year credits plus credits claimed in prior years.
• Credits apply against income taxes (Chapter 16 or 18) for eligible entities; non-refundable and not transferable; unused credits may be carried forward up to 3 years; pro rata credit available to S/K corporation owners or members.
• Adds an additional $1,000 tax credit for job creation if the employee is a Recently Deployed Unemployed Veteran and all applicable existing requirements are met, increasing total potential credit per qualifying employee to $2,250.
• Defines Recently Deployed Unemployed Veteran with criteria including Alabama residency at service time, honorable/general discharge within the prior two years, and Department of Labor certification of unemployment benefits eligibility or exhaustion.
• Applies credits only to employees hired after the act’s effective date (January 1, 2016).
• Repeals the Full Employment Act of 2011, with transitional provisions for taxpayers who would otherwise qualify for credits under the prior act and who file by deadlines tied to the 2016 tax year.
• Amends Section 40-18-321 to add the veteran credit and related definitions; requires Department rulemaking to implement and administer the act.
• Effective date of the act is 90 days after passage.

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

Subjects

Business and Commerce