Senate Bill 251 Alabama 2026 Session

Summary

Primary Sponsor

Kirk HatcherSenator

Democrat

Session

2026 Regular Session

Title

Tax abatement and tax incentive programs, NAICS Code references and definitions updated to latest terms

Summary

SB251 updates Alabama's tax abatement and incentive rules to reflect the 2022 NAICS codes, removes outdated plan references, and expands eligible projects and exemption rules for economic development.

What This Bill Does

The bill updates NAICS references to the 2022 version and removes references to the outdated Accelerate Alabama plan. It broadens what can qualify for tax abatements to include data processing centers, headquarters facilities, renewable energy facilities, tourism destinations, and other industrial or research enterprises, with new investment and job-creation rules. It sets new maximum exemption periods, including tiered timelines for data processing centers, and allows abatements of noneducational ad valorem taxes while preserving educational tax benefits. It also gives municipalities the authority to create research corridors and lets public entities provide resources to those corridors, with definitions tied to the Alabama Port Authority and other public bodies, and it takes effect June 1, 2026.

Who It Affects

• Private sector developers and private users pursuing qualifying industrial or research enterprises (including data processing centers, headquarters facilities, renewable energy facilities, and tourism destinations) who would be eligible for tax abatements and related incentives, subject to minimum capital investment and job-creation thresholds.
• Municipalities, public authorities (such as public industrial authorities and the Alabama State Port Authority), and state agencies (like the Department of Commerce) that administer abatements, approve inducements, and oversee the creation of research corridors and the provision of public resources to those projects.

Key Provisions

• NAICS updates: Replaces outdated references with the 2022 NAICS codes and updates related definitions and language to current style; removes references to the Accelerate Alabama plan.
• Expanded eligibility: Broadens 'industrial or research enterprise' to include data processing centers, headquarters facilities, renewable energy facilities, tourism destinations, and other specified activities, with detailed ownership and operation criteria and alignment to current economic plans.
• Data processing center standards: Establishes a qualifying data processing center as an 'industrial or research enterprise' with at least 20 new jobs and average annual compensation of at least $40,000; includes specified data processing and hosting services in the eligible activities.
• Major additions and cost rules: Defines 'major addition' and sets how original cost and capital investments are calculated for abatements; allows inclusion of certain ancillary costs for project calculations; limits to properties that constitute industrial development property.
• Maximum exemption periods: Sets standard 20-year exemption for most abatements; for data processing centers, creates 10/20/30-year schedules based on total capital investment ($200M–$400M, >$400M respectively) with conditions tied to construction and ongoing use; includes six-month inactivity rule to terminate exemptions.
• Education vs noneducation taxes: Allows abatements of noneducational ad valorem taxes and defines how these interact with educational ad valorem taxes under the program.
• Public authority and corridor framework: Authorizes municipalities to create research and development corridors with corporate authority and authorizes public entities to provide resources to those corridors; clarifies roles for public authorities and the Alabama Port Authority in relevant projects.
• Alabama Research Entity and qualifying projects: Establishes criteria for Alabama Research Entity participants (universities, hospitals, research foundations, and certain nonprofit/for-profit partnerships) and defines approved activity and qualification standards, including HQs and high-level research/ownership requirements.
• Effective date: Becomes effective June 1, 2026.

AI-generated summary using openai/gpt-5-nano on Feb 19, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue