(a) For tax years beginning on or after January 1, 2017, through the tax year beginning January 1, 2019, an Alabama income tax credit is allowed for eligible employers that employ an apprentice for at least seven full months of the prior taxable year. The credit shall equal up to one thousand dollars ($1,000) for each apprentice employed, not to exceed five apprentices employed. The Department of Revenue, in consultation with the Workforce Development Division of the Department of Commerce, shall establish a scale reflecting ranges of amounts of money an employer has invested in an eligible apprentice and a corresponding tax credit amount and shall award the tax credit in accordance with this scale following confirmation from the Workforce Development Division that the apprentice for whom the credit is claimed is in compliance with all federal and state requirements for the apprenticeship program. The credit shall not be available for an individual apprentice for more than four taxable years.
(b) For tax years beginning on or after January 1, 2020, eligible employers that employ an apprentice for at least seven full months of the prior taxable year shall receive a credit equal to one thousand two hundred fifty dollars ($1,250) for each apprentice employed, not to exceed 10 apprentices employed. The Department of Revenue, in consultation with the Workforce Development Division of the Department of Commerce and the Alabama Office of Apprenticeship, shall establish a scale reflecting ranges of amounts of money an employer has invested in an eligible apprentice and a corresponding tax credit amount and shall award the tax credit in accordance with this scale following confirmation from the Workforce Development Division and the Alabama Office of Apprenticeship that the apprentice for whom the credit is claimed is in compliance with all federal and state requirements for the apprenticeship program. The credit shall not be available for an individual apprentice for more than four taxable years.
(c) For each credit claimed for each qualified apprentice under subsection (b) associated with an apprentice enrolled in a secondary or postsecondary career and technical education program, who is under the age of 18 years at the time the credit is claimed, and who is participating in a youth registered or industry-recognized apprenticeship program registered with the Alabama Office of Apprenticeship and funded through the Carl D. Perkins Career and Technical Education Act of 2006, P.L. 109-270, as revised by the Strengthening Career and Technical Education for the 21st Century Act, P.L. 115-224, adult basic education and literacy programs funded under Title II of the Workforce Innovation and Opportunity Act, P.L. 113-128, or public workforce programs funded under Title I and Title III of the Workforce Innovation and Opportunity Act, P.L. 113-128, an eligible employer may qualify for an additional tax credit, not to exceed five hundred dollars ($500) to offset the costs associated with hiring each apprentice who is under the age of 18, not to exceed the aggregate cap of 10 apprentices hired, as provided in subsection (b). An eligible employer under this subsection may claim the additional tax credit described in this subsection after employing an in-school youth apprentice, who satisfies the specifications provided in this subsection, for 90 days.
(d) The credit shall be allowed against the tax imposed by Chapter 16 or Chapter 18. This tax credit shall not be allowed to decrease a taxpayer's tax liability to less than zero. The credit is not refundable or transferable. The credit shall be available, on a pro rata basis, to the owners of qualified employers that are entities taxed under subchapters S or K of the Internal Revenue Code or limited liability companies or professional corporations authorized to do business in this state. An employer applying for a tax credit must apply each year to receive the credit for the preceding calendar year.
(e) The cumulative amount of tax credits issued pursuant to this article shall not exceed seven million five hundred thousand dollars ($7,500,000) annually. The Department of Revenue shall ensure that this cap is not exceeded, shall prescribe the various methods by which these credits are to be issued, and shall develop procedures to notify taxpayers at such points in time when the tax credit caps in this subsection have been reached for the applicable tax credit year.
(f) If an employer employs an apprentice for less than the full preceding calendar year, but for at least 210 days during the full preceding calendar year, then the employer may apply for the full value of the credit.
(g) The Department of Revenue shall prescribe a form to claim this credit that provides information to the department sufficient for the proper administration of the credit.
(h) The participation of an employee with an apprenticeship program under this article and registration with the Alabama Office of Apprenticeship shall not constitute union affiliation, unless the employee expressly elects to affiliate with a union.
Last modified: May 3, 2021