House Bill 245 Alabama 2026 Session

Summary

Primary Sponsor

Terri CollinsRepresentative

Republican

Session

2026 Regular Session

Title

Rural Hospital Investment Program amended; to require the Department of Revenue to oversee the operations

Summary

HB245 shifts oversight of the Rural Hospital Investment Program from the State Treasurer to the Alabama Department of Revenue, expands program rules, and creates new tax credits for donations to eligible rural hospitals, effective immediately.

What This Bill Does

The bill changes who oversees the Rural Hospital Investment Program, moving oversight to the Alabama Department of Revenue. It expands definitions related to the program and sets up a framework for qualified donations to eligible rural hospitals. It creates a broad tax-credit system to reward donations, covering individuals, electing pass-through entities, corporations, and utility taxes, with specific caps and carryforwards. It also repeals the State Treasurer’s rulemaking authority related to this program and directs the Department of Revenue to issue administrative rules by January 1, 2026.

Who It Affects

• Rural hospitals: may receive more support through qualified donations and the new credit program.
• Taxpayers who donate to eligible rural hospitals (individuals, heads of household, married filers, etc.): may claim credits up to specified limits based on filing status and entity type.
• Electing pass-through entities: may claim up to 100% of qualified donations with a cap up to $450,000 per year for the credit, subject to pro rata allocation.
• Corporations: may claim 100% of qualified donations or 75% of the corporation’s tax liability (income, excise, or insurance premium), with a $500,000 annual limit.
• Utility tax payers with a utility tax direct-pay permit: may claim a credit equal to 100% of qualified donations, subject to permit requirements and department administration.
• Department of Revenue: to administer and issue credits, adopt rules, and manage credit reservations and verifications.
• Alabama Special Mental Health Fund: credits are designed not to reduce distribution to this fund.

Key Provisions

• §40-18-551 to §40-18-559 amendments: redefine terms (Board, Department, Eligible Rural Hospital, Eligible Taxes, Qualified Donation, Qualified Donor, Utility Tax) and extend program definitions.
• §40-18-552: establishes the Rural Hospital Investment Program Board with specified members (Governor, State Treasurer, Commissioner of Revenue, Senate President Pro Tempore, Speaker of the House, two Alabama Hospital Association reps, two business reps) and sets appointment timelines and meeting rules.
• Tax credits (§§40-18-557): provides 100% credit for donors based on filing status with caps ($15,000 for singles/HOH/separate, $30,000 for married filing jointly), plus higher caps for electing pass-through entities and corporate taxpayers with specific rules and limits.
• Utility tax credit (§§40-18-557): allows 100% of qualified donations against utility taxes, requiring a direct-pay permit and department coordination to reserve and verify credits.
• Credit use limits and carryforwards: total credits cannot exceed a taxpayer’s liability (or the state portion for financial institutions) and unused credits may be carried forward up to three years; credits are non-transferable for individuals, with specific provisions for entities.
• Administration and rules (§§40-18-559): Department of Revenue to adopt rules by January 1, 2026, outlining procedures for credit issuance and ensuring credits do not reduce distributions to the Alabama Special Mental Health Fund.
• Effective date: act becomes effective immediately upon passage, with credits available beginning January 1, 2026.

AI-generated summary using openai/gpt-5-nano on Feb 11, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue