House Bill 399 Alabama 2026 Session

Summary

Primary Sponsor

Leigh HulseyRepresentative

Republican

Session

2026 Regular Session

Title

Tax abatements for data processing centers, exemption period limited, collection of certain taxes on purchases required, sunset date extended

Summary

HB399 tightens and broadens Alabama's tax incentives for data processing centers by capping abatements, expanding tax collection on DPC purchases, extending incentive sunset dates, and guiding revenue to state and local programs.

What This Bill Does

It caps the maximum exemption period for data processing center abatements at 20 years starting January 1, 2027, with transitional rules allowing longer periods for certain pre-2027 abatements based on investment thresholds. It requires collection of state noneducational ad valorem taxes and sales/use taxes on specified building materials, energy infrastructure, and related purchases used by data processing centers beginning January 1, 2027. It extends the sunset for incentives under Act 2012-210, restricting new incentives for applications filed after July 31, 2028 (2032 in the text), while preserving incentives already granted under project agreements. It also revises how tax proceeds are distributed, directing funds to counties, the Department of Human Resources, the Department of Conservation and Natural Resources, and the Education Trust Fund, with defined annual allocations and adjustments.

Who It Affects

• Data processing centers and private users (owners, operators, and co-location partners) receiving abatements, now subject to a 20-year cap starting in 2027 and transitional provisions for earlier abatements.
• Local governments (counties and municipalities) and public authorities involved in financing, owning, or approving DPC projects and abatement agreements.
• The Alabama Department of Revenue and related state agencies (Department of Revenue, Department of Human Resources, Department of Conservation and Natural Resources) that administer taxes and allocate funds.
• Utilities and energy infrastructure owners involved in DPC projects (including energy facilities and renewable energy components) that may have special abatement rules and funding considerations.

Key Provisions

• Maximum Exemption Period: For new abatements after 1/1/2027, the period is 20 years from ownership or bond issuance; pre-1/1/2027 abatements may use 10, 20, or 30-year periods based on investment thresholds, but the 30-year option does not apply to abatements granted after 1/1/2027.
• Data Processing Center definition broadened to include centers, headquarters, R&D facilities, and related infrastructure (power, cooling, storage, and related equipment) meeting job and compensation thresholds.
• Taxes on DPC purchases: Beginning 1/1/2027, the state noneducational ad valorem taxes and state sales/use taxes on building materials, fixtures, structural components, real property improvements, and energy infrastructure for data processing centers shall be collected or abated under clarified terms.
• Energy/utility provisions: Special abatements apply to certain energy-related projects (including alternative energy and hydro) with defined percentages of tax relief, and some such abatements are exempt from standard procedural requirements.
• Sunset and incentives: Act 2012-210 incentives become unavailable for new applications filed after 7/31/2028 (2032 in the text), while projects already granted incentives remain under their agreed terms.
• Revenue distribution: Tax proceeds from these abatements are allocated to counties, the Department of Human Resources, the Department of Conservation and Natural Resources, and the Education Trust Fund, with specified transfer formulas and periodic adjustments.

AI-generated summary using openai/gpt-5-nano-2025-08-07 on Mar 10, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue