HB253 Alabama 2023 Session

Summary

Primary Sponsor

Adline ClarkeRepresentative

Democrat

Session

Regular Session 2023

Title

Relating to taxation; to amend Sections 40-9F-31, 40-9F-33, and 40-9F-38, Code of Alabama 1975; to further provide certain age restrictions for structures to qualify for tax credits; to allow rehabilitation credits to be tied to the year in which the reservation is allocated; to provide for additional rehabilitation credit allocations; to further provide for the membership of the Historic Tax Credit Evaluating Committee and the factors considered by the committee; and to make nonsubstantive, technical revisions to update the existing code language to current style.

Summary

HB253 updates Alabama's historic tax credit program by raising annual credits, changing when rehab credits are earned, tightening eligibility, and enhancing oversight and transfer rules.

What This Bill Does

It increases the annual cap for reserved historic tax credits from $20 million to $40 million for 2023–2027 (while keeping the overall program cap at $200 million for 2017–2027). It ties rehabilitation credits to the year a reservation is allocated (not when the rehab is placed in service) and adds up to $5 million per year to reduce the application backlog. It raises the eligible age for structures to qualify (75 years for applications after June 1, 2023, instead of 60) and sets 25% of qualified rehabilitation expenditures as the state credit, with caps of $5 million (non-residential) and $50,000 (residential). It also creates new transferability rules, adds a Rural set-aside, and redefines committee oversight and procedures.

Who It Affects

• Owners and developers of certified historic structures (both residential and non-residential) who rehabilitation credits apply to; they would face higher annual credit caps, a change in when credits are earned, and new transferability options.
• Taxpayers in small or rural counties and communities, as credits include a 40% set-aside for counties with population 175,000 or fewer and a process to allocate credits to those areas.

Key Provisions

• Annual credit reservation cap increased from $20,000,000 to $40,000,000 for 2023–2027, with the total reserved credits still limited by the broader $200,000,000 cap for 2017–2027 (including previously rescinded reservations).
• Rehabilitation credits are tied to the year the reservation is allocated, not the year the rehabilitation is placed in service.
• Additional rehabilitation credit allocations available, plus up to $5,000,000 per year to reduce the backlog of qualified applications (2024–2027).
• Age threshold for qualifying structures raised: after June 1, 2023, applications must involve properties that are 75 years old (60 years old previously).
• State credit amount set at 25% of qualified rehabilitation expenditures, with caps of $5,000,000 for all property types except certified historic residential structures ($50,000 cap for residential).
• Creation of the Historic Preservation Income Tax Credit Account within the Education Trust Fund; revenue transfer process to fund credits is defined.
• Credits are transferable and assignable (with at least 85% of the credit's value), can be claimed at the transferee level, and require transfer statements and documentation; credits cannot be transferred again after a single transfer.
• Establishment of the Historic Tax Credit Evaluating Committee with specified members and duties; the committee uses guidelines and factors (including community impact, ROI, geography, project viability, local support, leverage, jobs, and financing) to rank and allocate credits.
• 40% of annual credits reserved for projects in counties with population ≤175,000; funds may revert if not allocated by the third quarter of the program year.
• Credits claimed at the entity level for partnerships, LLCs, S corporations, trusts, or estates; pass-through entities do not receive credits at the individual level.
• Effective date: immediate following passage and approval.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.