HB224 Alabama 2016 Session

Updated Feb 26, 2026

Notable

Summary

Primary Sponsor: Danny GarrettRepresentative
Republican
Session: Regular Session 2016
Title: Taxation, tax credits for certain capital contributions to small businesses in Alabama, established, Dept. of Commerce to administer, Alabama Small Business Investment Company Act
Summary: HB224 would create the Alabama Small Business Investment Company Act to offer tax credits for capital contributions to Alabama small business investment funds, with Department of Commerce oversight to attract capital and stimulate jobs.
What This Bill Does
It establishes a program where taxpayers can earn nonrefundable tax credits for eligible cash contributions to approved Alabama small business investment funds, with the Department of Commerce determining fund eligibility and managing the program. The program caps total tax credits at $12.5 million per year for eight years, and credits are allocated to investors and vest over time (up to 12.5% per year) with carryforward possible. Funds must invest primarily in Alabama small businesses, report employment and financial data, and follow exit and compliance rules; credits can be revoked for ineligible contributions and certain penalties apply, with oversight and recapture provisions involving other state agencies.

Who It Affects
Taxpayers/investors who make credit-eligible capital contributions to an Alabama small business investment fund and who may receive a nonrefundable state tax credit (vested over several years and transferable only to affiliates).
Alabama small business investment funds and the Alabama businesses they invest in, which must apply for eligibility, invest in Alabama-based businesses, report detailed data to the Department of Commerce, may exit the program after meeting requirements, and are subject to caps, revocation, and compliance rules.

Key Provisions
Creates the Alabama Small Business Investment Company Act and defines key terms (Alabama small business investment fund, credit-eligible capital contributions, Alabama business concern, etc.).
The Department of Commerce will accept applications, determine eligibility, set credit-eligible capital contribution authority, and issue approvals to funds.
Establishes a nonrefundable tax credit for contributions to approved funds; credits vest over time (up to 12.5% per year) and can be carried forward; credits can be transferred only to affiliates; credits affect Education Trust Fund distributions as applicable.
Imposes an annual cap of $12.5 million in tax credits for eight years; allocations are prorated if applications exceed the cap.
Funds must collect contributed capital and equity investments at closing, and invest a significant portion in Alabama; funds face revocation of credits for ineligible contributions and must cure violations with a daily penalty if not corrected.
Funds must exit after investing 100% of their authority or when appropriate, with distributions and job-creation performance guiding exit terms; department conducts oversight and may recapture or adjust credits in certain circumstances.
Requires annual reporting by funds (financials, investments, job data, etc.) and imposes an annual compliance fee; department summaries provided to the Legislature.
Department may adopt rules to implement the act and determine eligibility for proposed investments within 15 business days, or the investment is deemed Alabama-based.

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