House Bill 142 Alabama 2026 Session

Summary

Primary Sponsor

Margie WilcoxRepresentative

Republican

Session

2026 Regular Session

Title

Class 2 municipalities; tax increment districts, further provided

Summary

HB142 allows Class 2 municipalities to include up to 50% of their equalized taxable property in tax increment districts, with related procedural and duration rules, effective October 1, 2026.

What This Bill Does

The bill increases the cap on how much property value can be included in a municipality’s tax increment districts to 50% for Class 2 (and Class 3) entities, and excludes military reservation property from that calculation. It preserves required steps for creating TIDs—public hearings, notices, and a detailed project plan—and allows an advisory board to be formed by mutual agreement. It also sets district duration limits (generally up to 30 years, up to 35 years under certain blight/industrial conditions) and clarifies exclusions and requirements related to development and relocation plans.

Who It Affects

• Class 2 and Class 3 municipalities: may form tax increment districts that include up to 50% of their equalized taxable property (excluding military reservation property).
• Property owners within Class 2/3 municipalities: their property may be included in TIDs, which can affect local taxes and redevelopment plans.
• Deferred tax recipients (taxing entities within the district): must be notified, may designate representatives, and participate in meetings regarding the project plan and financing.
• Military reservation properties inside district boundaries: excluded from the aggregate value used to calculate the cap.

Key Provisions

• Cap change: The aggregate value of equalized taxable property in a tax increment district plus existing TIDs may not exceed 50% of the public entity's total equalized taxable property for Class 2 or Class 3 municipalities; properties within military reservations are excluded from this calculation.
• District duration: Maximum duration is 30 years, with a potential extension to 35 years if at least 50% by area of the district’s real property is a blighted/economically distressed area or if the district is an enhanced use lease area or Major 21st Century Manufacturing Zone (subject to project plan amendments).
• Process requirements: To create or modify a TID, the local government must hold a public hearing, provide notices (including to deferred tax recipients), and prepare a detailed project plan describing boundaries, development plans, costs, financing, and relocation considerations.
• Advisory board: By mutual agreement, the creating public entity and deferred tax recipients may establish an advisory board with representation from the governing bodies; a majority of members must be from the public entity’s governing body.
• Effective date: The act becomes effective on October 1, 2026.

AI-generated summary using openai/gpt-5-nano on Feb 17, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Counties & Municipalities