House Bill 350 Alabama 2026 Session

Summary

Primary Sponsor

Mike ShawRepresentative

Republican

Session

2026 Regular Session

Title

To establish the Angel Investor Tax Credit Act

Summary

Establishes a state income tax credit program to encourage angel investments in Alabama startups by offering a 25% credit for qualified investments, with annual caps and safeguards.

What This Bill Does

If enacted, the bill would allow qualified angel investors to claim a 25% income tax credit for cash investments in qualifying Alabama businesses. The credit has per-investor annual caps of $250,000 and program-wide caps that start at $5 million in 2027, rise to $10 million in 2028, and reach $12 million each year thereafter; unused credits can be carried forward up to five years. At least 50% of credits would be reserved for priority-impact businesses; remaining credits are awarded on a first-come, first-served basis, with reserved credits reallocated if not used by October 1. The act also defines what counts as priority-impact and qualified businesses, requires reporting on jobs and economic impact, and provides recapture rules if the investment is disposed of, the business relocates, or fraud occurs.

Who It Affects

• Qualified angel investors: may receive a 25% tax credit for eligible investments in Alabama businesses, subject to caps and recapture rules.
• Qualified Alabama businesses: must meet eligibility criteria (location, size, payroll concentration, years in operation, and focus areas) to attract angel investments and qualify for credits.

Key Provisions

• Credit equals 25% of qualified investment (tax years 2027–2031).
• Per-investor credit cap: $250,000 per tax year.
• Program-wide credit caps: $5,000,000 (2027); $10,000,000 (2028); $12,000,000 (each subsequent year).
• Carryforward: unused credits may be carried forward up to five years and cannot reduce tax liability below zero.
• 50% of credits reserved for priority-impact businesses; remaining credits awarded first-come-first-served; reserved credits not awarded by Oct 1 are reallocated to other qualified investments.
• Definitions and administration: clarifies what constitutes priority-impact businesses and qualified businesses; requires coordination between the Department of Revenue and the Department of Commerce; includes reporting requirements.
• Recapture: credits can be recaptured if the investment is disposed of within three years, the business relocates outside Alabama within three years, or fraud is involved.
• Effective date: June 1, 2026.
• Priority Impact Business categories include rural health care, agriculture, educational supports for high-need students, home-based education, workforce development, and housing affordability.

AI-generated summary using openai/gpt-5-nano on Feb 12, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue