SB52 Alabama 2025 Session

Summary

Primary Sponsor

Bobby D. SingletonSenator

Democrat

Session

2025 Regular Session

Title

Taxation, tax credits, Alabama employers provided a tax credit for employees targeted under the federal Work Opportunity Tax Credit program

Summary

Alabama would offer a state tax credit to employers who hire workers in federal Work Opportunity Tax Credit targeted groups, matching the federal credit up to $1,000 per employee, starting in 2026.

What This Bill Does

The bill allows Alabama employers to claim a state income tax credit or financial institution excise tax credit for employees who are in WOTC targeted groups, equal to the federal credit claimed by the employer up to $1,000 per employee, in the tax year the employee completes 12 consecutive months of employment. The credit applies against Alabama taxes (Chapter 16 income tax or Chapter 18 financial institution tax), is nonrefundable and cannot reduce tax liability below zero, and is available on a pro rata basis to owners or members of qualified Alabama businesses taxed as S corporations or partnerships. There is a $10 million annual cap on the total credits, and the credit can be claimed for tax years beginning January 1, 2026 and thereafter; the Department of Revenue would issue rules to implement the measure.

Who It Affects

• Alabama employers who hire individuals in WOTC targeted groups, who could claim a state tax credit up to $1,000 per qualifying employee (subject to the $10 million annual cap).
• Owners or members of qualified Alabama business employers taxed as an Alabama S corporation or under Subchapter K (partnerships), who receive their portion of the credit on a pro rata basis.

Key Provisions

• Establishes an Alabama income tax credit and financial institution excise tax credit for employers who hire individuals in WOTC targeted groups, with the credit amount equal to the federal credit up to $1,000 per employee, in the tax year the employee completes 12 consecutive months of employment.
• Credit is against Chapter 16 or Chapter 18 taxes, is nonrefundable, cannot reduce tax liability below zero, and is not transferable; available on a pro rata basis to owners/members of certain pass-through entities.
• Annual cap of $10,000,000 for each fiscal year the credit is available.
• Credit can be claimed for tax years beginning January 1, 2026 and each year thereafter.
• Department of Revenue may adopt rules to implement the act.
• Effective date: January 1, 2026.

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