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AlabamaHB3992026 Regular SessionHouseWALLET

Tax abatements for data processing centers, exemption period limited, collection of certain taxes on purchases required, sunset date extended

Sponsored By: Leigh Hulsey (Republican)

Enacted

Taxation & Revenue

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Bill Overview

Analyzed Economic Effects

8 provisions identified: 4 benefits, 2 costs, 2 mixed.

Large data centers retain longer exemptions

For abatements granted starting January 1, 2027, centers with peak demand of at least 100 megawatts retain longer equipment exemptions. Covered computers, servers, licensed software, cooling systems, and other necessary operating equipment qualify throughout the maximum exemption period. Beginning January 1, 2027, the Governor can also grant full-period state construction-tax abatements to these centers in designated targeted counties. That county-based tax break is not automatic.

Large data centers face earlier taxes

These limits cover abatements granted starting January 1, 2027, for data centers with peak power demand of at least 100 megawatts. State property-tax breaks, excluding education taxes, end no later than the date the property enters service. Most covered state construction-tax breaks also end by that date. Specified operating equipment follows a separate rule allowing tax breaks throughout the maximum exemption period.

Data center tax breaks face conditions

For abatements granted starting January 1, 2027, data centers get 10 years at investments of $200 million or less. Investment above $200 million allows 20 years; both limits use investment within 10 years after acquisition, construction, and equipping begins. An extra 10 years, up to 30 total, requires meeting investment thresholds and signing a binding local-investment agreement. Alabama's Revenue and Commerce departments and the affected local government must approve the agreement, including investment amounts, timing, and verification. Failure to meet a material obligation cancels the extension and requires repayment of state taxes saved during it, plus interest.

Alabama counties receive health services funding

Beginning June 1, 2026, Alabama credits $378,000 from specified tax collections to its 67 counties. The money comes from collections left after administrative expenses and required replacement of money in other funds. Counties share it under state allocation rules. They must use it only for specified full-time health services and extension services, not direct household payments.

Alabama directs money to welfare services

Beginning June 1, 2026, Alabama credits $1.322 million from specified tax collections to the Department of Human Resources. The money comes from collections left after administrative expenses and required replacement of money in other funds. The department must use it for legally defined general welfare purposes. This allocation does not set a payment amount for individual households.

Data center incentives continue with protections

Beginning June 1, 2026, companies can apply for the data-center incentive program through July 31, 2032, but not afterward. Incentives granted before July 31, 2032, remain protected by their project agreements even without program renewal. The amendments also leave incentives unchanged for projects executed before June 1, 2026. That protection covers expansions of those projects during the 10 years after June 1, 2026.

Local data center tax breaks need approval

Beginning June 1, 2026, covered local data-center tax abatements require approval by a county or city governing body's resolution. This covers property taxes, construction-related taxes, and payments made in place of those taxes. The resolution must approve the specific tax break before it takes effect. Incentives for projects executed before June 1, 2026, and their expansions during the following 10 years are exempt.

Data center taxes shift from education

Beginning January 1, 2027, specified data-center construction-tax receipts go to Alabama's General Fund instead of its Education Trust Fund. Covered items include building materials, fixtures, structural parts, property improvements, power infrastructure, backup generators, and battery systems. The General Fund receives this revenue stream, while the Education Trust Fund no longer receives it. The law does not state the amount redirected or a resulting change in household services.

Sponsors & Cosponsors

Sponsor

  • Leigh Hulsey

    Republican • House

Cosponsors

  • Arnold Mooney

    Republican • House

  • Bryan Brinyark

    Republican • House

  • Chad Robertson

    Republican • House

  • Jim Carns

    Republican • House

  • Matthew Hammett

    Republican • House

  • Mike Kirkland

    Republican • House

  • Neil Rafferty

    Democratic • House

  • Norman Crow

    Republican • House

  • Ontario Tillman

    Democratic • House

  • Russell Bedsole

    Republican • House

  • Shane Stringer

    Republican • House

  • Susan DuBose

    Republican • House

Roll Call Votes

All Roll Calls

Yes: 576 • No: 0

House vote • 4/9/2026

Hulsey Motion to Concur In and Adopt Senate Amendment - Adopted Roll Call 1357

Yes: 102 • No: 0

Senate vote • 4/9/2026

Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 1315

Yes: 32 • No: 0

Senate vote • 4/9/2026

Jones motion to Adopt - Adopted Roll Call 1314

Yes: 31 • No: 0

House vote • 3/10/2026

Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 832

Yes: 103 • No: 0 • Other: 1

House vote • 3/10/2026

Third Reading in House of Origin

Yes: 102 • No: 0

House vote • 3/10/2026

Motion to Adopt - Adopted Roll Call 830

Yes: 102 • No: 0

House vote • 3/10/2026

Motion to Adopt - Adopted Roll Call 831

Yes: 104 • No: 0

Actions Timeline

  1. Enacted

    4/17/2026House

  2. Fiscal Responsibility and Economic Development 1st Amendment Offered

    4/9/2026Senate

  3. Jones motion to Table - Adopted Voice Vote

    4/9/2026Senate

  4. Jones 1st Amendment Offered

    4/9/2026Senate

  5. Jones motion to Adopt - Adopted Roll Call 1314

    4/9/2026Senate

  6. Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 1315

    4/9/2026Senate

  7. Hulsey Motion to Concur In and Adopt Senate Amendment - Adopted Roll Call 1357

    4/9/2026House

  8. Ready to Enroll

    4/9/2026House

  9. Ready to Enroll

    4/9/2026House

  10. Enrolled

    4/9/2026House

  11. Signature Requested

    4/9/2026Senate

  12. Signature Requested

    4/9/2026Senate

  13. Signature Requested

    4/9/2026Senate

  14. Delivered to Governor

    4/9/2026House

  15. Fiscal Responsibility and Economic Development 1st Amendment

    3/17/2026Senate

  16. Reported Out of Committee Second House

    3/17/2026Senate

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

    3/17/2026Senate

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

    3/11/2026Senate

  19. Pending Committee Action in Second House

    3/11/2026Senate

  20. Third Reading in House of Origin

    3/10/2026House

  21. Transportation, Utilities and Infrastructure Engrossed Substitute Offered

    3/10/2026House

  22. Motion to Adopt - Adopted Roll Call 830

    3/10/2026House

  23. Hulsey 1st Amendment Offered

    3/10/2026House

  24. Motion to Adopt - Adopted Roll Call 831

    3/10/2026House

  25. Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 832

    3/10/2026House

Bill Text

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