(a) An Alabama small business tax credit is hereby allowed for any Alabama small business employer that creates a new job and hires a new full-time employee to fill that job. The credit shall be a one-time credit equal to one thousand five hundred dollars ($1,500) for each qualified new employee, and shall only be applicable to a tax year in which the new employee has completed 12 months of consecutive full-time employment with the employer.
(b) To qualify for the credit, the employer must have a net employee growth as of the last date of each tax year during which the employer claims a credit pursuant to this article. The net employee growth must equal or exceed the number of qualified new employees for which a credit is sought in the current or applicable tax year, plus the total number of qualified new employees for whom credits were claimed pursuant to this article in a prior tax year.
(c)(1) The credit shall be allowed against the tax imposed by Chapter 16 or Chapter 18, of this title. A financial institution shall be allowed to claim the credit against the liability determined in Chapter 16 of this title. The credit shall be available, on a pro rata basis, to the owners or members of qualified Alabama small business employers that are entities taxed under subchapters S or K of the Internal Revenue Code.
(2) An Alabama small business employer may receive a credit under this section or under the Full Employment Act of 2011, Article 11 of this chapter, but in no case shall the employer receive both a credit under this article and a credit provided under the Full Employment Act of 2011. Once a credit is claimed for an employee under this section or the Full Employment Act of 2011, the employer may not thereafter make a claim for a credit of that employee under the other article.
(d) This tax credit may not be allowed to decrease a taxpayer's tax liability to less than zero in any tax year, but any unused portion may be carried forward for a period of up to three years. The credit is not refundable or transferable.
(e) To the extent the credit is used to offset a financial institution excise tax liability, the Department of Finance shall promulgate rules to ensure that the credit in no case would reduce the distribution for municipalities and counties.
(f) The income tax credit provided in this section may be claimed only for employees who are hired following July 25, 2016, and shall only apply to tax years beginning on or after January 1, 2016.
(g) The tax credit provided in this section shall expire on January 1, 2019, unless otherwise extended by the Legislature.
Last modified: May 3, 2021