Tax Incentives

Whether you are a new company looking to relocate to Butler County, or an existing company wanting to expand here, there are tax incentives that may be available to you. A summary of those can be found below, with further information available on the Alabama Department of Revenue website.

In addition to the state-level tax incentives listed below, local-level incentives may also be available. For help determining tax rates and finding available incentives, contact the Butler County Commission for Economic Development at 334-371-8400.

Jobs Tax Credit

  • Cash rebate of up to 3% of the previous year's gross payroll (not including fringe benefits) for qualifying new, direct jobs. Incentive period is 10 years.
  • Extra 0.5% cash rebate is available on the wages of veterans, for companies, which employ a workforce composed at least 12% of veterans.
  • An extra cash rebate of 1% for projects in counties with a population of less than 25,000. Two sites per year located outside of these counties can receive this rebate at the Governor's discretion.
  • Amounts paid as refunds of taxes for utility services. Not dependent on utility taxes actually owed or paid.

Investment Tax Credit

  • Credit of up to 1.5% of the qualified capital investment expenses for a qualifying project each year for 10 years (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 can be sold to create cash for projects, with Commerce Department approval.

Alabama Corporate Income Tax Incentives

The Alabama corporate income tax rate is one of the lowest in the nation at 6.5%. The following tax credits may be available for qualifying projects:

Other Potential Income Tax Incentives:

  • 15 year net operating loss carryforward
  • Enterprise zone credit/exemption for qualifying sites in economically depressed areas
  • Basic skills educational tax credit covering up to 20% of employer sponsored educational program that enhances basic skills of employees
  • Heroes for Hire income tax credit

For more information, see the Alabama Income Tax Incentives section on the ADOR website.

Business Privilege Tax Incentives - Confirm

Business privilege tax rate and caps

  • Graduated based on the entity's federal taxable income apportioned to Alabama
  • Rate ranges from $.25 to $1.75 for each $1,000 of net worth in Alabama
  • Business privilege tax ranges from a minimum of $100 to a maximum of $15,000 for most business entities
  • Maximum business privilege tax is $3,000,000 for financial institutions, financial institution groups, and insurance companies

Available privilege tax credits and deductions include:

  • Net amount invested in pollution-control equipment
  • Net amount invested in air carrier hub operation equipment
  • Enterprise zone credit

For more information, see the Business Privilege Tax Information section on the ADOR website.

Property Tax Incentives

Assessed value and millage rates

  • All real and personal business property will be assessed at 20% of its fair market value
  • The combined state and local millage rate will then be applied to the assessed value
  • The Alabama state property tax rate is limited to 6.5 mills (.0065%).
  • Both cities and counties may levy additional millage rates. Current millage rates for counties and cities can be found in the Millage Rate Section of the ADOR website.

Possible property tax abatements and exemptions include:

  • Abatements of non-educational property taxes for qualifying new or expanding businesses can be extended from 10 to 20 years
  • Abatements of non-educational property tax incremental increases on property and equipment
  • Pollution-control equipment exemptions
  • No property taxes on raw materials, finished goods, and inventory held for resale

For more information, see the Property Tax Incentives section on the ADOR website.

Sales and Use Tax Incentives

Sales and use tax rate differentials

  • General rate is 4.0%.
  • Rate for manufacturing and farm machinery is 1.5%
  • Rate for automotive vehicles is 2%
  • Rate for food sold through vending machines is 3%
  • In addition to state taxes, most cities and counties also levy their own sales & use taxes, which provide similar rate differentials. Current rate information for Lowndes County can be found in the City and County Tax Rates Section of the ADOR website.

Possible sales and use tax abatements and exemptions include:

  • Abatements of non-educational sales and use taxes on construction materials
  • Pollution control equipment exemption
  • Raw materials exemption
  • Exemption of certain aircraft maintenance parts
  • Utility gross receipts tax exclusion
  • Exemption from taxes for increased utility services, for up to 10 years
  • Enterprise zone exemption
  • Other exemptions may apply and can be found in the sales and use tax law section of the ADOR website
  • For more information, see the Sales and Use Tax Incentives section on the ADOR website.