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AlabamaHB3932026 Regular SessionHouseWALLET

Tax abatement and tax incentive programs, NAICS Code references and definitions updated to latest terms

Sponsored By: Kelvin Lawrence (Democratic)

Enacted

Taxation & Revenue

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Bill Overview

Analyzed Economic Effects

3 provisions identified: 1 benefits, 0 costs, 2 mixed.

Data center tax breaks follow investment

Beginning June 1, 2026, private users of Alabama data centers have investment-based limits on construction-related sales tax and noneducation property tax breaks. The maximum is 10 years for investment of $200 million or less within 10 years. It is 20 years for investment above $200 million but no more than $400 million within 10 years. A 30-year maximum requires investment above $200 million within 10 years and above $400 million within 20 years. Investment counts real and personal property costs that can be capitalized for federal income taxes. Measurement generally starts when acquiring, building, and equipping begins. For the 30-year tier’s $200 million test, measurement starts when physical construction and equipping begins.

Business projects face $2 million minimum

Beginning June 1, 2026, projects seeking Alabama Chapter 9G incentives must propose at least $2 million in capital spending. Spending must cover additions, expansions, improvements, renovations, reopenings, rehabilitation, or replacement of existing equipment or other tangible property. The project must mainly involve an approved activity. It cannot have a project agreement with the Governor for other incentives. Meeting these tests provides qualifying status but does not set the tax benefit’s amount.

Updated business eligibility for tax breaks

Beginning June 1, 2026, Alabama uses 2022 industry codes to decide which businesses and activities qualify for affected tax incentives. It replaces codes 51221 and 51913 with 5122 and 51929, adds 513, and removes 511. Businesses targeted by CatALyst, Alabama’s economic development plan, or its amended or replacement plans are also recognized as eligible targets. Otherwise-allowed customer service centers and call centers are expressly not excluded. Farming and retail exclusions remain, and businesses must meet each incentive’s separate requirements.

Sponsors & Cosponsors

Sponsor

  • Kelvin Lawrence

    Democratic • House

Cosponsors

  • Anthony Daniels

    Democratic • House

  • David Faulkner

    Republican • House

  • Prince Chestnut

    Democratic • House

Roll Call Votes

All Roll Calls

Yes: 348 • No: 0

Senate vote • 4/7/2026

Motion to Read a Third Time and Pass - Adopted Roll Call 1192

Yes: 33 • No: 0

Senate vote • 4/7/2026

Third Reading in Second House

Yes: 33 • No: 0

House vote • 2/26/2026

Motion to Adopt - Adopted Roll Call 634

Yes: 95 • No: 0 • Other: 8

House vote • 2/26/2026

Third Reading in House of Origin

Yes: 94 • No: 0 • Other: 9

House vote • 2/26/2026

Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 635

Yes: 93 • No: 0 • Other: 11

Actions Timeline

  1. Enacted

    4/17/2026House

  2. Signature Requested

    4/8/2026Senate

  3. Delivered to Governor

    4/8/2026House

  4. Third Reading in Second House

    4/7/2026Senate

  5. Motion to Read a Third Time and Pass - Adopted Roll Call 1192

    4/7/2026Senate

  6. Ready to Enroll

    4/7/2026House

  7. Enrolled

    4/7/2026House

  8. Reported Out of Committee Second House

    3/17/2026Senate

  9. Read for the Second Time and placed on the Calendar

    3/17/2026Senate

  10. Third Reading in House of Origin

    2/26/2026House

  11. Economic Development and Tourism Engrossed Substitute Offered

    2/26/2026House

  12. Motion to Adopt - Adopted Roll Call 634

    2/26/2026House

  13. Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 635

    2/26/2026House

  14. Engrossed

    2/26/2026House

  15. Read for the first time and referred to the Senate Committee on Fiscal Responsibility and Economic Development

    2/26/2026Senate

  16. Pending Committee Action in Second House

    2/26/2026Senate

  17. Read for the Second Time and placed on the Calendar

    2/12/2026House

  18. Reported Out of Committee House of Origin

    2/11/2026House

  19. Read for the first time and referred to the House Committee on Economic Development and Tourism

    2/5/2026House

  20. Pending Committee Action in House of Origin

    2/5/2026House

Bill Text

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