Saturday, April 19, 2014

Taxes and Incentives

 

Tax Summary - Madison County, Alabama

Sales Tax Rates

 

General    

Educational    

Mfg. Machinery    

Educational    

Alabama 4.0% 0.0% 1.5% 0.0%
Madison County 0.5% 0.5% 0.25% 0.25%
City of Huntsville 3.5% 0.0% 0.0% 0.0%
Total 8.0% 0.5% 1.75% 0.25%
Abatable 7.5% 0.5% 1.5% 0.25%

 

 

General    

Educational    

Mfg. Machinery    

Educational    

Alabama 4.0% 0.0% 1.5% 0.0%
Madison County 1.5% 1.5% 0.75% 0.75%
City of Madison 3.0% 0.0% 1.5% 0.0%
Total 8.5% 1.5% 3.75% 0.75%
Abatable 7.0% 1.5% 3.0% 0.75%

 

 

State     

City

County    

Total

Gurley 4.0%   3.0%     1.5% 8.5%    
New Hope 4.0% 2.5% 1.5% 8.0%
Owens Cross Roads 4.0% 2.5% 1.5% 8.0%
Triana 4.0% 2.0% 1.5% 7.5%
Redstone Arsenal 4.0% 0.0% 1.5% 5.5%
Rural Madison County 4.0% 0.0%  1.5%  5.5% 

 

Property Tax Rates

 

Total Mils    

Education    

Abatable    

Alabama 6.5 3.0 3.5
Madison County 32.0 21.0 11
City of Huntsville 19.5 6.5 13.0
Total 58.0 30.5 27.5

 

 

Total Mils    

Education    

Abatable    

Alabama 6.5 3.0 3.5
Madison County 27.0 16.0 11
City of Madison 24.0 11.0 13.0
Total 57.5 30.0 27.5

 

Tax Summary - Huntsville/Limestone County, Alabama

Sales Tax Rates

 

General    

Educational    

Mfg. Machinery    

Educational    

Alabama 4.0% 0.0% 1.5% 0.0%
Limestone County 2.0% 2.0% 1.0% 1.0%
City of Huntsville 3.5% 0.0% 0.0% 0.0%
Total 9.5% 2.0% 2.5% 1.0%
Abatable 7.5%   1.5%  

 

 

General    

Educational    

Mrg. Machinery    

Educational    

Alabama 4.0% 0.0% 1.5% 0.0%
Limestone County 2.0% 2.0% 1.0% 1.0%
City of Madison 3.0% 0.0% 1.5% 0.0%
Total 9.0% 2.0% 4.0% 1.0%
Abatable 7.0%   3.0%  

 

Property Tax Rates

 

Total Mils    

Education    

Abatable    

Alabama 6.5 3.0 3.5
Limestone County 19.0 5.5 13.5
City of Huntsville 35.5 22.0 13.0
Total 60.5 30.5 30.0

 

 

Total Mils    

Education    

Abatable    

Alabama 6.5 3.0 3.5
Limestone County 19.0 5.5 13.5
City of Madison 34.5 11.0 13.0
Total 60.0 19.5

30.0

 

Incentives

Alabama's tax structure and statutory incentives provide a definite advantage over other states for company’s looking to grow in a business-friendly environment with a highly-skilled workforce. For a complete description of all incentives and abatements offered in Alabama, click here: http://revenue.alabama.gov/Taxincentives/incentivesum.pdf

 

Statutory Sales and Use Tax Abatements

If the proper procedures are followed, qualifying industries may abate all state and the local non-educational portion of construction related transaction (sales and use) taxes associated with constructing and equipping a project. Please note that the Industrial Development Board for the City of Huntsville must grant the abatement for the qualifying project before the abatement is effective. Therefore, any purchases made prior to the granting of the abatement are ineligible for the sales and use tax abatement. The abatements for the state and local non-educational sales and use taxes end once the project is placed in service, with the exception of data processing centers. For complete details on sales and use tax abatements and the requirements and process, click here: http://revenue.alabama.gov/Taxincentives/incentivesum.pdf

 

Special Exemptions

Raw Materials Exemption. Raw materials used by manufacturers or compounders used as an ingredient or component part of their manufactured or compounded product are specifically exempt from sales and use taxation. Alabama Department of Revenue Regulations 810-6-1-.137 and 810-6-1-.80 address the raw materials exemption.

Exemption of Certain Aircraft Maintenance Parts. All parts, components and systems that become a part of a fixed or rotary wing military aircraft or certified transport category aircraft which undergoes conversion, reconfiguration, or general maintenance (as long as the aircraft FAA registration is out of state) is exempt from state sales taxes. The local sales taxes cannot be exempted unless specifically exempted by local law or by joint resolution of the local governing body. This exemption does not provide an exemption for use tax.

Pollution Control Equipment Exemption. All equipment or materials purchased primarily for the control, reduction or elimination of air or water pollution are exempt from state sales and use tax.

Utility Gross Receipts Tax Exemptions. There are several exemptions from the utility gross receipts tax. Sewer costs are not taxed. Water used in industrial manufacturing in which 50 percent or more is used in industrial processing is also exempt from the utility gross receipts tax. Additionally, Alabama law allows exclusions from the utility gross receipts tax and the utility service use tax for utility services used in certain types of manufacturing and compounding processes.

 

Statutory Property Tax Abatements and Exemptions.

For qualifying industries, it is possible to abate the non-educational state and local portion of property tax. These abatements are valid for a maximum period of ten years and must be granted by the local granting authority prior to placing the project in service. No additional property (real or personal) may be eligible for abatement once the project is placed in service, except for data processing centers or if a “major addition” is made. For more details and requirements, click here.

Inventory Exemptions. Unlike many other states, Alabama does not levy a property tax on inventory of goods, wares, and merchandise that is offered for sale. However, inventory that is used for lease or rental purposes is subject to the property tax. Materials that are to be compounded or manufactured and are stocked at plants or furnaces for manufacturing purposes are also exempt from property tax.

Pollution Control Equipment Exemption. All equipment, facilities or materials constructed or acquired primarily for the control, reduction or elimination of air or water pollution are exempt from property tax.

 

Corporate Income Tax

Corporations pay Alabama income tax based on their net taxable income derived from business conducted within the state. The amount of net income apportioned to Alabama is determined by applying a four factor formula of property, payroll, and double weighted sales to total net income. The rate of corporate income taxation is 6.5% (Individuals are taxed at a rate of 5%). Corporations that anticipate having a tax liability of $5000 or more must file and pay estimated tax on a quarterly basis. There are several credits and deductions that are statutorily available for Alabama corporate taxpayers. The taxpayer may participate in any or all of the statutory tax credits for which requirements are met. Please see the following paragraphs regarding these deductions and credits.

 

Income Tax Credits and Deductions

Federal Income Tax Deduction. There are constitutional restrictions that add to the stability of the Alabama corporate (and individual) tax environment. Amendment 212 of the Constitution allows the corporate (and individual) taxpayer to deduct from its gross apportioned and allocated income, the apportioned (to Alabama) amount of federal income tax paid or accrued, creating a lower net effective income tax rate.

Net Operating Loss Carryforward. For Alabama corporate income tax, a net operating loss is applied to the first taxable year to which it may be carried and can be carried forward 15 consecutive years. However, corporations may not carry back a net operating loss to offset Alabama income in prior years.

Heroes For Hire Income Tax Credit. Employers are eligible for a $1,000 nonrefundable income tax credit for each full-time recently deployed unemployed veteran hired. Additionally, any recently deployed unemployed veteran who holds at least 50% ownership interest in a start-up business is eligible for up to a one-time $2,000 nonrefundable income tax credit for expenses associated with the start-up business.

 

Capital Credit Program

A capital credit is available to be applied to the income tax liability generated by income from a project approved by the Alabama Department of Revenue. The capital credit is available each year, for 20 years. The annual capital credit is calculated at five percent (5%) of the total capital costs of the qualifying project and the credit begins in the year the qualifying project is ‘placed in service’. For all projects the capital credit cannot exceed 100% of the total capital costs over the 20 year period. There are several types of projects under the capital credit, all of which statutory requirements must be met in order to qualify for the credit. For complete details, click here.

 

AIDT Workforce Training

AIDT’s Total Workforce Delivery System has provided thousands of skilled, motivated employees to Alabama industries since 1971. The key to AIDT’s response is a unique infrastructure allowing the total, upfront commitment of its resources to the success of your company. AIDT offers comprehensive pre-employment selection and training, leadership development, on-the job training, continuous/process improvement assessments, maintenance assessments, and industrial safety assessments and training—all specific to your company’s needs. From lead time planning to program delivery, AIDT rallies its total in-house capabilities to deliver a quality workforce.

Services Offered

Pre-Employment Selection and Training »

Leadership Development »

Industrial Safety Assessment »

Industrial Maintenance Technician Assessment Program »

Process Improvement Assessment »

AIDT EX+RA »

AIDT, Alabama’s worker training agency, is the first state workforce training organization in the United States to earn international certification for its quality management system. SRI Quality System Registrar auditors certified AIDT’s conformity to requirements specified in ISO 9001:2008 standards developed by the International Organization for Standardization (ISO). This registration includes the development and execution of AIDT’s pre-employment and on-the-job training programs.

 

Tennessee Valley Authority

Valley Investment Initiative

VII is an economic development incentive program jointly conducted by TVA and distributors of TVA power. VII offers competitive incentives to eligible customers who make multi-year commitments to invest in the Tennessee Valley. The program has enjoyed great success with existing power customers since October 2009 and was recently expanded for use as a recruitment tool to attract new customers, investments and jobs to the Valley. Customers in targeted sectors whose facilities meet the following qualifiers may be evaluated for a VII award:

Customer characteristics

• Minimum 250 kW peak monthly demand

• Minimum 25 employees and no plans to reduce workforce by 50% or more

• Financially sound

Long-term commitments

• Projected capital investment over a five-year period of 25% of an existing facility’s book value or $2.5 million in a new facility

• Standard power contract with a remaining term at least as long as the five-year VII award period

Award amounts are based on a customer’s five-year projections and actual performance in these categories:

• Capital investment

• Jobs added or retained

• Average wages paid

• Load factor