SB299 Alabama 2023 Session

Summary

Primary Sponsor

Arthur OrrSenator

Republican

Session

Regular Session 2023

Title

Relating to the Coal Production Tax Credit; to amend Section 40-18-220, Code of Alabama 1975, to allow the credit to be claimed against both income and utility services taxes; to allow the credits to be earned by all persons that increase their production of coal mined in Alabama from the prior year; to allow any unused credits to be carried forward for no more than five years;

Summary

SB299 expands and tightens Alabama's coal production tax credit, adds base-year and carryforward rules, lets more taxpayers claim it, and imposes sunset and reporting requirements for incentives.

What This Bill Does

Allows the coal production credit to offset both income taxes and utility services taxes and applies to any person or entity that increases Alabama coal production from the prior year. Sets the credit at $1 per ton of increased Alabama coal production, based on a base year (default 1994 or a base year established by 12 consecutive months if 1994 data aren’t available). Unused credits may be carried forward up to five years; credits allocated to owners of flow-through entities can be used by those owners to offset their taxes. Before claiming, the Department of Revenue must certify the increased production; the act also imposes sunset dates and reporting guidelines for incentives, with many existing incentives repealed in 2028 unless extended.

Who It Affects

• Coal producers and other taxpayers mining Alabama coal (including corporations and flow-through entities) that increase their coal production from the prior year, who may claim the credit to offset income and utility service taxes.
• Owners or beneficiaries of flow-through entities (e.g., partners, ESOPs, mutual funds, REITs) to whom the credit is allocated; they may use their allocated share to offset their own taxes and must be considered in the carryforward and transfer provisions.

Key Provisions

• Credit amount and base year: $1 per ton of increased Alabama coal production over the base year; base year default is 1994, with a 12-month alternative base year if 1994 production did not occur.
• Tax offset: Credit can be used against income taxes and/or utility services taxes, or a combination, with the same credit used only once; for flow-through entities, credits may be allocated to owners.
• Certification and eligibility: Before claiming, the coal producer must certify the amount of increased production to the Department of Revenue, which will review and allow the credit.
• Carryforward and transfer: Unused credits may be carried forward for up to five years; the act includes provisions for credit transfers or sales and allocates credits across multiple ownership levels.
• Sunset and incentives rules: The Coal Production Tax Credit is repealed effective December 31, 2028 unless extended for up to five more years; the act also repeals or sunsets other incentive programs and requires new incentives to include sunset dates, performance statements, and reporting requirements starting in 2024.
• New incentive legislation guidelines: Beginning with the 2024 Regular Session, new tax credits must include a performance statement showing legislative purpose (e.g., job creation, competitiveness, behavior inducement), a five-year expiration rule, carryforward limits, and transfer restrictions; tax credit reporting to the Department of Revenue is required for post-2024 credits.

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

Subjects

Relating to economic tax incentives; to establish sunset provisions and reporting guidelines