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Alabama does not offer a standalone state Research & Development (R&D) Tax Credit in 2025. Instead, businesses can pursue the federal R&D credit and alternative state incentives, such as the donation-based Innovating Alabama program or jobs-related credits.
No, there is no standalone state R&D credit; focus on federal options.
Up to 20% of qualified research expenses above a base amount.
Wages, supplies, contract research (65%), and computer rentals for innovative activities.
Use regular method (excess over base) or Alternative Simplified Credit (ASC).
Yes, with payroll tax offset up to $500K if no income tax liability.
Up to 20 years; 1-year carryback.
Documentation of QREs and activities for at least 3 years.
Yes, if performed by U.S. taxpayers; no geographic limit.
It reduces federal liability, potentially lowering Alabama's federal-adjusted income base.
IRS Publication 334 and Form 6765.