HB260 Alabama 2018 Session

Summary

Primary Sponsor

Donnie ChesteenSenator

Republican

Session

Regular Session 2018

Title

Irrigation equip. or reservoirs for agriculture purposes, income tax credit, eligibility for credit, Sec. 40-18-342 am'd.

Summary

HB 260 updates Alabama's irrigation tax credit by setting one credit per taxpayer for three periods, adjusting the credit amounts and rules for qualified irrigation equipment and reservoirs, and adding carryover and reporting requirements.

What This Bill Does

It changes how the irrigation credit works across three timeframes: 2011–2017, 2018–2022, and after 2022, with specific percentage-based credits and caps in each period. It limits each taxpayer to a single credit per period, adjusts the maximum credit amount, allows carryforward for up to five years, and extends eligibility to pass-through entities. It also sets conditions on when a reservoir is required, adds annual reporting to a state department, and clarifies that the credit cannot exceed the taxpayer's Alabama income tax liability.

Who It Affects

• Agricultural businesses and trades that purchase and install qualified irrigation equipment or qualified reservoirs in Alabama, who can claim the credit within the specified periods and limits.
• Taxpayers with Alabama income tax liability, including owners of pass-through entities (such as LLCs, partnerships, and S corporations) who can claim their share of the credit on their individual or corporate returns.

Key Provisions

• Eligible taxpayers may claim one irrigation/ reservoir credit per period: 2011–2017, 2018–2022, and after 2022.
• 2011–2017: credit equals 20% of the cost of qualified irrigation equipment and related conversion costs, limited to $10,000 and not exceeding the taxpayer's Alabama income tax liability; credit taken in the year placed in service.
• 2018–2022: credit equals 20% of cost, with a tiered cap: the greater of 20% of cost not to exceed $10,000 or 10% of cost not to exceed $50,000; limited to $10,000 or up to $50,000 depending on cost; taken in the year placed in service; carryforward allowed.
• After 2022: credit equals 20% of cost not to exceed $10,000, not exceeding tax liability; taken in the year placed in service; carryforward allowed.
• For surface water irrigation, the system must operate with a qualified reservoir unless the water comes from a river/stream with average annual flow over 8,000 cubic feet per second; a qualified reservoir is not required for groundwater irrigation.
• Credit can be carried to the five subsequent tax years, with the unused portion applied in later years.
• Pass-through entities must pass credits through to shareholders, partners, or members pro rata.
• Taxpayers claiming the credit must file an annual informational report with the Department of Agriculture and Industries; information is subject to confidentiality rules and may be aggregated for legislative use.

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