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 would cap data processing center tax abatements at 20 years starting in 2027, require large data centers to pay state sales/use taxes on purchases, extend the sunset for abatements, and guide how tax revenues are distributed.

What This Bill Does

The bill defines data processing centers and broadens what counts as an industrial or research enterprise, including data centers. Beginning January 1, 2027, abatements for data processing centers would be limited to a maximum of 20 years, with a tiered schedule (10/20/30 years) based on private investment and when the abatement was granted. It requires certain large data centers to pay state sales and use taxes on their purchases, with the tax proceeds distributed to designated state funds and programs, while extending the sunset date for abatements. The act also makes technical language updates to align with current statutes.

Who It Affects

• Data processing centers and their private owners/users, who may see shortened or adjusted tax relief due to the 20-year cap and investment-based tiers beginning in 2027.
• State and local governments and public funds (e.g., education, parks, welfare programs, and county distributions), which would receive tax revenue from purchases and other taxes previously abated.

Key Provisions

• Data Processing Center is defined as an establishment with at least 20 new jobs and an average annual compensation of at least $40,000, engaged in processing/hosting services and related activities, and included as an industrial or research enterprise.
• Maximum exemption period for data processing center abatements is 20 years from the date of initial issuance or ownership beginning 1/1/2027, with a tiered approach (10/20/30 years) for abatements granted before 1/1/2027 based on investment levels; abatements granted after 1/1/2027 use the 20-year cap.
• Beginning 1/1/2027, data processing centers meeting certain criteria must pay state sales/use taxes on purchases, with proceeds distributed to defined funds and programs (including education and other state needs).
• The sunset date for abatements is extended, and incentives under Act 2012-210 have a cut-off for new applicants filing after 7/31/2028 (2032), while existing projects may continue under prior terms.
• The act includes technical updates to codification and aligns the new provisions with current statutory language, and it becomes effective June 1, 2026.

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