HB540 Alabama 2019 Session

Summary

Primary Sponsor

Bill Poole

Republican

Session

Regular Session 2019

Title

Taxation, incentives for attraction of new and expanding business including rural areas, investment credit for income tax, financial institution excise tax, insurance premium tax, utility tax, further incentives for rural areas as defined, purchase of credits, incentives for high-tech companies, Ala. Incentives Modernization Act, Secs. 40-18-6.1, 40-18-8.1, 40-18-376.3 added; Secs. 40-18-376, 40-18-376.1, 40-18-410, 40-18-411, 40-18-412, 40-18-413, 40-18-414 am'd.

Summary

HB 540 updates Alabama's incentive laws to attract rural, low-growth and high-tech businesses by expanding investment credits, creating new opportunity-zone tools, and strengthening local funding and oversight.

What This Bill Does

The bill broadens and extends tax incentives for incentivized projects (notably a 1.5% capital investment credit over 10 years that can offset multiple taxes and be carried forward or transferred). It creates and formalizes opportunity zone programs and related credits, with rules for approved opportunity funds and qualified funds, prioritizing investment in Alabama OZ property and high-impact projects. It adds targeted and jumpstart county provisions with enhanced job and investment credits for rural areas and technology companies, and it expands Growing Alabama and local economic development funding programs to support site preparation and infrastructure. It updates premium tax credits for insurers (office facilities and real property investments) and changes how premium tax proceeds are distributed to state funds, while adding new requirements for reporting and oversight, including ADECA governance of funds and projects.

Who It Affects

• Insurance companies and their Alabama operations, because premium tax credits are expanded (office facilities and real property investments) and premium tax revenues are redistributed under new rules.
• Rural and high-tech communities and businesses, because new investment credits, job credits, technology company incentives, targeted/jumpstart county provisions, opportunity zone funds, Growing Alabama credits, and related reporting/oversight are designed to attract investment, create jobs, and support infrastructure in those areas.

Key Provisions

• Investment tax credit expanded: incentivized projects may claim a 1.5% annual investment credit on capital investment over a 10-year period, usable against income tax, financial institution excise tax, insurance premium tax, and utility taxes, with proration if not a full year; credits may be carried forward up to five years and can be transferred under defined conditions with approval.
• Technology company incentives: creates a new technology company framework (40-18-376.3) offering an additional 2.0% jobs credit and allows flexible qualification for projects, including five new employees to establish existence even if previous criteria are not fully met; defines technology company criteria
• Targeted and jumpstart county incentives: expands incentives in counties meeting population or growth criteria, including a 4.0% jobs credit on wages for eligible employees and, for certain projects, a 15-year investment credit if most output is sold to Alabama businesses within 50 miles; limits and sequencing for approvals and annual extensions to new projects
• Opportunity zones and funds: adds 40-18-6.1 and 40-18-8.1 and 41-10-46.01 to create a framework where approved opportunity funds and qualified funds can offer impact investment tax credits, require at least 75% of capital to be invested in Alabama OZ property, cap total credits at $50 million cumulatively, and require annual ADECA oversight and reporting; credits can be allocated among fund owners and carried forward up to five years
• Growing Alabama and local development funding: establishes Growing Alabama Credits to support local economic development organizations (LEDOs) for site preparation and infrastructure, with caps (initially $5 million in 2016 and up to $10 million annually for 2017-2020), online donation processing, and a requirement that at least 25% of funds go to targeted/jumpstart counties; includes annual reporting to the Legislature
• Premium tax credits and distribution changes: expands premium tax credits to offset insurer office facilities and Alabama real property investments tied to real property investment credits; restructures distribution of premium taxes to the General Fund, Education Trust Fund, and Alabama Special Mental Health Trust Fund with caps and post-2020 transfers ensuring ETF funds may be redirected to the General Fund; quarterly tax payment structure for insurers is maintained
• Agricultural Center and other assets: designates the Agricultural Center as an eligible asset for the investment credit for up to 10 years; directs broader implementation and oversight of these incentives by ADECA, Revenue, Commerce, and Finance, with annual reporting and potential fee authority
• Oversight and reporting: adds new reporting requirements to the Legislature on the use and impact of incentives and funds, and formalizes the roles of ADECA and other departments in implementing and regulating the program
• Effective date and remedies: sets an effective date and provides standard severability and repeal of conflicting laws to implement the Act

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