House Bill 608 Alabama 2026 Session

Summary

Primary Sponsor

Marilyn LandsRepresentative

Democrat

Session

2026 Regular Session

Title

Income Tax; to create the R&D Tax Credit Enhancement Act

Summary

This bill creates an R&D Tax Credit Enhancement Act to encourage research investments in Alabama by universities, non-profits, and early-stage life sciences companies through a refundable/transferable tax credit with a state cap.

What This Bill Does

The act establishes a state income tax credit for eligible entities that invest in research and development in Alabama. The base credit is 10% of annual qualified research expenses, rising to 15% for in-state collaborative research. Startups or small firms (or their QRO partners) can elect a refundable $250,000 credit or a transferable credit instead of the standard credit, with the option to carry unused credits forward for up to five years. Credits are capped at $30 million annually, and credits may be awarded proportionally if the cap is reached; the Department of Revenue must create a streamlined application process and publish an annual report on program statistics.

Who It Affects

• Universities in Alabama and non-profit research institutes that incur qualifying research expenses will be eligible for credits.
• Early-stage life sciences companies (startups ≤3 years old or small firms with <50 employees) and their collaborative partners can choose refundable or transferable credits.
• In-state academic institutions conducting collaborative research can qualify for a higher 15% credit for the total cost of the in-state collaborative research.
• QROs and eligible businesses that contract for R&D can participate in the program, subject to the annual cap and administration requirements.

Key Provisions

• Establishes the R&D Tax Credit Enhancement Act to provide an income tax credit for R&D work by universities, non-profits, and early-stage life sciences companies in Alabama.
• Credit amount rules: 10% of annual qualified research expenses; 15% for in-state collaborative research; refundable $250,000 credit or transferable credit for startups/small firms in lieu of standard credit; carryforward of unused credit up to five years.
• Annual cap of $30,000,000 for credits; if cap is reached, credits awarded proportionally to each entity’s share of qualifying expenses.
• Transfers and sale: credits, except as allowed for refundable/transferable options, cannot be transferred or sold; streamlined application process and required documentation; annual public reporting on applications, credits issued, total investments, and geographic/sector distribution.
• Effective dates: applicable to tax years 2027 through 2031; effective date of October 1, 2026; Department of Revenue to adopt necessary implementing rules.

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