SB257 Alabama 2017 Session

Summary

Primary Sponsor

Arthur OrrSenator

Republican

Session

Regular Session 2017

Title

Irrigation projects, income tax credit, add'l credit authorized with cap, expiration, Sec. 40-18-342 am'd.

Summary

SB257 rewrites Alabama's irrigation tax credit by changing eligibility, caps, carryover options, and adding reporting requirements.

What This Bill Does

The bill amends the irrigation tax credit (Section 40-18-342) for agricultural businesses that buy qualified irrigation equipment, convert equipment to electricity, or build reservoirs. It creates three time-based credit rules: (1) 2011–2017: a 20% credit with a $10,000 cap against the tax liability; (2) 2017–2022: a flexible cap where the credit is either 20% of cost up to a $10,000 cap or 10% of cost up to a $50,000 cap, whichever yields more credit, with reservoir rules for surface water; (3) after 2022: a flat 20% credit with a $10,000 cap. The credit is limited to one purchase/installation per taxpayer and can be carried forward up to five years. Credits for pass-through entities are allocated to owners pro rata. Recipients must file an annual informational report with the Department of Agriculture and Industries.

Who It Affects

• Agricultural trade or business taxpayers who purchase qualified irrigation equipment, convert irrigation equipment to electricity, or construct reservoirs; they may claim the credit against Alabama income tax under the specified caps and rules.
• Owners, partners, members, or shareholders of pass-through entities (such as LLCs, partnerships, and S corporations) who claim the credit on their individual or combined tax liability in proportion to their ownership.

Key Provisions

• Amends Section 40-18-342 to modify the income tax credit for qualified irrigation equipment, fuel conversions, and reservoirs and to establish different rules by time period.
• For tax years 2011–2017: 20% credit of accrued costs, with a maximum credit of $10,000 and limited by the taxpayer's Alabama income tax liability; surface water systems may require a qualified reservoir unless the source is a river/stream with average flow over 8,000 cfs; groundwater systems do not require a reservoir.
• For tax years 2017–2022: 20% of costs with a tiered cap (either 20% up to a $10,000 cap or 10% up to a $50,000 cap), whichever yields a greater credit; reservoir requirements similar to the earlier period.
• For tax years after 2022: 20% of costs with a $10,000 cap; surface water rules and reservoir requirement remain, with groundwater systems not requiring a reservoir.
• Credit is limited to one qualifying project per taxpayer (one purchase/installation or one reservoir) and can be carried forward up to five years; credits pass through to owners pro rata for pass-through entities.
• Requires an annual informational report from recipients; data provided to Legislature with confidential protections described in the bill.
• Effective date: immediately after governor approval.

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