HB390 Alabama 2016 Session

Under existing law, there are no economic incentives or tax credits extended to Alabama businesses for qualified research expenses incurred by Alabama companies that spend funds and resources in-house, or pay Alabama research companies to conduct qualified research for new or improved products or services

This bill would establish the Alabama Innovation Act that would provide for a research and development tax credit to certain Alabama companies modeled on the federal research and development tax credit. The credit would be 25 percent of research at an Alabama research entity, and 10 percent for other research conducted in Alabama. The credit could be taken against the income tax or the financial institution excise tax

This bill would limit the Alabama Innovation tax credits to no more than twenty-five million dollars ($25,000,000) of credits per year, and no eligible company or business could claim more than 20 percent of the credits available in any year

The credits would be claimed on a first-come, first-served basis

Relating to research and development tax credits; to add Article 17, commencing with Section 40-18-390, to Chapter f Title 40 of the Code of Alabama 1975; to enact the Alabama Innovation Act; to allow a research and development tax credit for qualified research expenses in Alabama in the amount of 25 percent of research at an Alabama research entity, and 10 percent of other research in Alabama; to provide that no more than twenty-five million dollars ($25,000,000) of tax credits would be allowed in any year, and no one taxpayer would be allowed more than 20 percent of the credits available in any year; to provide that earned but unused credits could be carried forward for five years; to require that the tax credit only apply to research falling within certain industries; to provide for the promulgation of rules; and to provide for the coordination between the availability of the federal research credit and the credit created by this act.