HB387 Alabama 2017 Session

Summary

Primary Sponsor

Donnie ChesteenSenator

Republican

Session

Regular Session 2017

Title

Income tax, irrigation project tax credit, add'l credit authorized with cap, Sec. 40-18-342 am'd.

Summary

HB387 adds an optional alternative income tax credit for irrigation equipment, fuel conversions, and reservoirs that can be larger than the existing credit and sets a sunset date unless extended.

What This Bill Does

It creates an optional alternative tax credit equal to 10% of eligible costs, limited by the taxpayer’s Alabama tax liability to $50,000, to be taken in lieu of the existing 20% credit up to $10,000. The credit covers the purchase and installation of qualified irrigation equipment, costs to convert irrigation equipment from fuel to electricity, and costs for qualified reservoirs; surface water withdrawals must use a qualified reservoir unless the source is a river or stream with an average annual flow above 8,000 cubic feet per second. Each taxpayer can claim only one purchase or reservoir credit, with the credit allowed to be carried forward for up to five years and allocated to pass-through owners on a pro rata basis. The new credit sunsets on December 31, 2022 unless extended by the Legislature and becomes effective for tax years beginning after December 31, 2017.

Who It Affects

• Agricultural trade or business that purchases qualified irrigation equipment, converts irrigation equipment from fuel to electricity, or installs qualified reservoirs.
• Owners, partners, members, or beneficiaries of pass-through entities (like LLCs, partnerships, and S corporations) who claim the credit on their Alabama taxes and receive a pro rata share.

Key Provisions

• Authorizes an alternative income tax credit for agricultural trade or business equal to 10% of eligible costs, not to exceed $50,000 of tax liability, in lieu of the existing 20% credit up to $10,000.
• Covers purchase/installation of qualified irrigation equipment, conversion costs, and qualified reservoirs; surface water withdrawal rules apply with a reservoir requirement unless high-flow conditions are met.
• Limitations include one purchase or reservoir per taxpayer, five-year carryforward, and pro rata sharing for pass-through entities.
• Sunset of the alternative credit is December 31, 2022 unless extended by the Legislature; the act is effective for tax years beginning after December 31, 2017.

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