Alabama § 40-18-417.4 - Scope and Use of Growing Alabama Credits.

§ 40-18-417.4. Scope and Use of Growing Alabama Credits.

(a) A taxpayer is allowed a Growing Alabama Credit to be applied against all of the following:

(1) To offset the income taxes levied in this chapter, or as an estimated tax payment of income taxes.

(2) To offset the state portion of the financial institution excise tax levied in Chapter 16.

(3) To offset the insurance premium tax levied by subsection (a) of Section 27-4A-3.

(4) To offset state license taxes levied by Article 2 of Chapter 21.

(b) In no event shall the Growing Alabama Credit cause a taxpayer’s tax liability to be reduced by more than 50 percent. Unused credits may be carried forward for no more than five years.

(c) Growing Alabama Credits shall be granted to taxpayers using an online system administered by the Department of Revenue. The online system shall allow taxpayers to agree to make a cash contribution to an economic development organization which was approved by the Renewal of Alabama Commission, as provided in Section 40-18-417.3. The online system shall ensure that credits are not granted for contributions to an economic development organization in excess of the amounts approved by the Renewal of Alabama Commission, as provided in Section 40-18-417.3.

(d) The cumulative amount of funding approved pursuant to this section shall not exceed twenty million dollars ($20,000,000) in a calendar year for calendar years ending prior to January 1, 2024, which amount shall increase to twenty-three million dollars ($23,000,000) for the calendar year ending December 31, 2024, twenty-six million dollars ($26,000,000) for the calendar year ending December 31, 2025, twenty-nine million dollars ($29,000,000) for the calendar year ending December 31, 2026, thirty-two million dollars ($32,000,000) for the calendar year ending December 31, 2027, and thirty-five million dollars ($35,000,000) for calendar year ending December 31, 2028.

(e) The Renewal of Alabama Commission shall reserve at least 25 percent of the amounts specified in subsection (d) for projects located in targeted or jumpstart counties as defined in Section 40-18-376.1. In the event applications are not received and credits are not allocated for projects in these areas by the close of the second quarter of the program year, the funds may revert for allocations of other project applications.

(f) To the extent that a Growing Alabama Credit is used by a taxpayer, the taxpayer shall not be allowed any deduction that would have otherwise been allowed for the taxpayer’s contribution. Credits may only be claimed by the donating taxpayer and may not be assigned or transferred to any other taxpayer. For purposes of this section, a donating taxpayer includes a taxpayer who is a shareholder of an Alabama S corporation or a partner or member of a subchapter K entity that made a contribution to an economic development organization which was approved by the Renewal of Alabama Commission.

(g) The Department of Finance shall adopt rules to ensure that the Growing Alabama Credit in no case would reduce the distribution for the Alabama Special Mental Health Trust Fund by using any unencumbered funds.