HDR Doing Business

Tax Incentives

Tax incentives are available for new and expanding companies in Coffee County and the City of Elba, Alabama. A summary of those incentives can be found below. Additional information can be found on the Alabama Department of Revenue website.

Corporate Income Taxes

  • Corporate income tax rate is 6.5%
  • Based on the net taxable income of business done in Alabama
  • Businesses are permitted to deduct all of their federal taxes apportioned to Alabama

Potential incentives include:

  • Net-operating loss carryforward
  • Pollution-control equipment deduction
  • Income tax capital credit (see below)
  • Basic skills educational tax credit

Capital Credit

  • Available to qualifying all new and expanding companies and industries
  • Gives businesses up to 5% credit of capital costs
  • Can be applied to the Alabama income liability generated by the project income
  • Available annually for a maximum of 20 years

For more information, see the Capital Credit Information section on the ADOR website.

Business Privilege Tax

  • Based on a company's net worth in Alabama and the company's ability to pay
  • Rate ranges from $.25 to $1.75 for each $1,000 of net worth in Alabama

Available incentives include:

  • Pollution-control equipment deduction
  • Air carrier with hub operations deduction

Property Tax

Alabama state property tax rate is 6.5 mills (.0065%). County and city rates vary and current rate information can be found in the Property Tax Section of the ADOR website.

Possible incentives include:

  • Abatements for non-educational property taxes
  • Pollution-control equipment exemptions
  • No property taxes on inventory
  • Raw materials inventory exemptions

Sales and Use Tax

The state sales and use tax rates are 2.5%. City and county rates vary and current rate information can be found in the City and County Tax Rates Section of the ADOR website.

Available incentives include:

  • Abatement of State and non-educational local construction-related taxes
  • Raw materials, pollution control equipment, quality control testing, and donations to charitable entities exemptions
  • Utility gross receipts tax exclusions
  • Discount if sales tax is paid promptly

State Unemployment Tax

  • Employer requirement for the state unemployment tax is based on the first $8,000 of each employee's compensation
  • Rates vary from 0.5% to 5.4%
  • New employer rate is 2.7%
  • Rates are based on employer's experience rating
  • Employees do not contribute

Jobs Tax Credit

  • Cash refund of up to 3% of the previous year's gross payroll (not including fringe benefits) for qualifying new, direct jobs. Incentive period is up to 10 years.
  • Up to an additional 0.5% cash refund is available on the wages of veterans, for companies, which employ a workforce composed of at least 12% of veterans.
  • Up to an additional 1% cash refund for projects in counties with a population less than 25,000. Two sites per year located outside of these counties can receive this refund at the Governor's discretion.

Investment Tax Credit

  • Credit of up to 1.5% of the qualified capital investment costs for a qualifying project each year for up to 10 years (Up to 15 years for projects in counties with populations less than 25,000 selling their output nearby)
  • Credits can be used to reduce income tax (or taxes on banks or insurance companies), and taxes for utility services.
  • Credits can be carried forward for five years.
  • The first three years of the credits may be sold to create cash for projects, with Department of Commerce approval.
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