Taxes and Incentives
Alabama offers highly competitive tax incentives for automotive manufacturers and automotive suppliers locating to the state. Additionally, the state has low tax and business costs compared to other states within the North American Automotive Manufacturing Corridor. See a
tax comparison of tax-related costs in Northeast Alabama, Georgia, North Carolina, South Carolina and Tennessee.
Alabama Business Privilege Tax
The Alabama Business Privilege Tax is a tax on the net worth of corporations, limited liability entities, and disregarded entities. The tax rate is based upon the company’s ability to pay and is determined by the company’s federal taxable income in Alabama.
Deductions are available for:
- Pollution Control Equipment
- Air Carrier with Hub Operation
- Enterprise Zone Credit
Corporate Income Tax
Alabama has one of the lowest corporate income tax rates in the United States. The income tax rate is based on a corporation’s net taxable income derived from business conducted in Alabama.
Income Tax Capital Credit
The Income Tax Capital Credit is offered to new and expanding businesses located in Alabama. Companies can receive a credit calculated at 5% of total capital investment for qualifying projects. The capital credit is available every year, for 20 years.
Enterprise Zone Tax Incentives
Jackson County has been designated as a State Enterprise Zone. Through the program, businesses locating to or expanding within Jackson County may be eligible to receive additional incentives and assistance.
Click here to download the Alabama Enterprise Zone Brochure (pdf).Other Income Tax Incentives
Qualifying businesses may apply for additional income tax incentives.
Other incentives include:
- Net Operating Loss Carry-Forward
- Pollution Control Equipment
- Basic Skills Educational Tax Credit
- Coal Credit
Property Tax
Property Taxes, or Ad Valorem Taxes, are assessed at 20% of the fair market value of both real and personal business property. Millage rates vary depending on the county and city.
Millage Rates
Millage rate information is subject to change. Please contact the DeKalb County Economic Development Authority, Jackson County Economic Development Authority, or Marshall Economic Development Council for specific local and state millage rates.
State: 6.5 (3.0 Education)
DeKalb County: 11.5-14.5
Jackson County: 11.5-13.5
Marshall County: 13.5
Deductions are available for:
- Pollution Control Equipment
- Inventory
Sales and Use Tax
Alabama offers competitive incentives and deductions for state and local sales and use tax. The state general tax rate is 4%. Local tax rates vary by county and city.
Incentives include:
- Tax Abatements
- Vendor Discount
- Exemption for Raw Materials
- Sales and Use Tax Reciprocity
- Exemption for Pollution Control Equipment
- Exemption for Quality Control Testing and Charitable Donations
- Utility Gross Receipts Tax Exclusions
- Enterprise Zone Credit
Property and Sales Tax Abatements
Local property and sales tax abatements are available to qualifying new or expanding businesses in DeKalb, Jackson and Marshall Counties.
Available abatements include:
- State Sales and Use Taxes
- Non-Educational County and City Sales and Use Taxes
- Non-Educational State, County and City Property Taxes (up to 10 years)
- Mortgage and Recording Taxes