Alabama R&D Tax Credits

Even though the federal R&D credit is consistent across the country, states offer a variety of programs for businesses engaging in research and development. While Alabama doesn't have a statute specific to R&D, the Alabama Jobs Act provides incentives to qualified businesses for approved projects that create new jobs in the state, including those conducting space research.

Taxpayers that qualify for the Alabama R&D credit need to plan ahead and receive approval from the Alabama Department of Commerce before they can claim the credit. Learn more about Alabama's Investment Credit here. 

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R&D Tax Credit Available:

Yes

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Eligible Entities:

C-Corporation, S-Corporations, LLCs, Partnerships

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Deadline for Tax Filing:

Online Application

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Data Required to Compute Credit:

Qualified Capital Investment approved with a State Project Agreement

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What Information is needed?

Various — See Alabama's R&D Tax Credit Law Website here

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Credit Carryforward:

The annual credit is not refundable, but any unused credit associated with the annual credit can be carried forward for up to 5 years.

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The R&D tax credit equals:

• Tax credit of up to 1.5% annually of qualified capital investment for a qualified project, for a period of up to 10 years.
• The tax credit can be utilized against: income taxes, including estimated taxes; financial institution excise tax; insurance premiums tax; utility taxes paid; or a combination of the above taxes for a period of 10 years.

Specific Items to Note:

• Only taxpayers that have been approved by the Alabama Department of Commerce for qualifying projects are eligible to claim the credit, as allowed by the executed State Project Agreement.
• Once the Alabama Department of Commerce certifies the annual Investment Credit, it must be claimed via the My Alabama Taxes (MAT) website.