HB86 Alabama 2025 Session

Updated Feb 23, 2026

Notable

Summary

Primary Sponsor: Terri CollinsRepresentative
Republican
Session: 2025 Regular Session
Title: Rural Hospital Investment Program established, tax credits for donations to rural hospitals authorized
Summary: HB86 creates the Rural Hospital Investment Program in Alabama to fund rural hospitals through donations and state tax credits, managed by a new board under the State Treasurer and coordinated with the Department of Revenue.
What This Bill Does
It establishes the Rural Hospital Investment Program Board to oversee the program and coordinate with the Department of Revenue. It authorizes tax credits against certain state taxes for donations to eligible rural hospitals, with annual statewide caps ($20M in 2026, $25M in 2027, $30M thereafter) and per-hospital caps ($750k in 2026, $1M in 2027, $1.25M thereafter). Credits begin in 2026 and can be carried forward up to three years but are not transferable, and the program ends credits after 2028 unless extended by later law. Hospitals must meet eligibility criteria (rural location, licensing, nondiscrimination, indigent care, audits, and a five-year viability plan with local funding requirements) and donors can designate or pool donations, with preapproval and annual reporting requirements; third parties may solicit/d manage donations with fees capped at 5% and must share hospital lists. The program requires annual reports to the Legislature and sets rules for publicizing the program and issuing credits, including a process for preapproval and ranking hospitals by financial need.

Who It Affects
Donors (individuals, couples, pass-through entities, and corporations): they can claim a state tax credit equal to most or all of their qualified donations up to specified dollar caps, against various taxes (income, excise, insurance premium, and utility taxes), with rules on how credits are calculated, claimed, and carried forward.
Rural hospitals that qualify: they can receive donations designated for care and operations, must meet specific eligibility criteria, and will be ranked and monitored by the board; their funding depends on local government support and the hospital’s adherence to reporting and planning requirements.
Local governments and communities: they must provide measurable local support (at least 10% of the total assistance to a hospital, with limited in-kind contributions) to participate in the program.
Third-party fundraisers and soliciters: they may solicit/manage donations for eligible hospitals, must provide lists of eligible hospitals, and may charge fees up to 5% of donations.
State agencies (State Treasurer and Department of Revenue): they implement and oversee the program, issue credits, publish lists and reports, and ensure compliance with rules and reporting timelines.

Key Provisions
Creates the Rural Hospital Investment Program and a Rural Hospital Investment Program Board within the Office of the State Treasurer to oversee the program and coordinate with the Department of Revenue.
Defines eligible taxes (income, financial institution excise, insurance premium, and utility taxes) and qualified donations (unrestricted transfers to eligible rural hospitals).
Sets eligibility criteria for hospitals: must be a rural general acute care, rural emergency, or critical access hospital licensed in Alabama; located in a rural area; provide services to Medicare/Medicaid patients and indigent patients; comply with reports and audits; and submit a five-year viability plan with local funding requirements (at least 10% of total assistance from local government, with up to 5% in-kind).
Establishes hospital ranking and program governance: the board must create an operations manual ranking rural hospitals by financial need and publish the list and manual, with annual reporting and preapproval of qualified donations to ensure limits are met.
Credit structure and limits: donors can receive 100% of qualified donations as credits against applicable taxes, with per-donor caps ($15,000 single/HOH, $30,000 married), higher caps for certain entities (e.g., electing pass-throughs up to $450,000; corporations up to 100% or 75% of tax liability with a $500,000 annual limit), and a separate utility tax credit; credits require a direct pay permit for utilities and are subject to annual statewide caps ($20M in 2026, $25M in 2027, $30M thereafter) and per-hospital caps ($750k in 2026, $1M in 2027, $1.25M thereafter).
Timing and reporting: credits may be claimed starting with the 2026 tax year and expire after 2028 unless extended; hospitals must report donations within 30 days of receipt, and starting March 2027 must file donor-use reports with the board; an annual report on donations and credits will be provided to the Legislature.
Administration and publicity: rules will be adopted by the Department of Revenue and State Treasurer; the board may hire an Alabama company to publicize the program and develop materials and a website.
Additional provisions: credits may also qualify for federal tax benefits but are not guaranteed to do so; the act becomes effective immediately.

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