Alabama Corporate Tax Rate - The Alabama income and property taxes are among the lowest found anywhere in the United States. In addition, Alabama offers statutory incentive programs such as a corporate income tax credit for qualifying companies. This includes the cost of land, buildings, machinery and equipment. The program provides an annual corporate income tax credit of five percent of the total capital cost of the project for 20 years. Assuming a total cost of $20 million in building and equipment, the abatement provides up to $1 million in credit against Alabama corporate income taxes each year for a term of 20 years.
Alabama's corporate tax structure consists of a flat rate of 6.5% on all corporate income. Among states levying corporate income taxes, Alabama's rate ranks 30th highest nationally. In FY2007, state-level corporate tax collections (excluding local taxes) were $110 per capita, which ranked 38th highest among states that tax corporate income.
The Capital Investment Tax Credit, available each year for 20 years, is calculated at five percent (5%) of the total capital costs of the qualifying project and the credit begins in the year the qualifying project is "placed in service:' The capital credit is available to all types of business entities, including, but not limited to: C corporations, S corporations, limited liability companies (LLCs), partnerships, trusts, and sole proprietorships.
Act 2001-965 amended the income tax capital credit law to allow for lower thresholds for the requirements for new employees and for capital costs for projects locating or expanding in a "favored geographic area.”
Alabama requires most businesses to obtain a license and pay a fee if operating in the state. Please check with the state to make sure your business is complying with the license requirements for your particular profession.