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AlabamaHB862025 Regular SessionHouseWALLET

Rural Hospital Investment Program established, tax credits for donations to rural hospitals authorized

Sponsored By: Terri Collins (Republican)

Enacted

Taxation & Revenue

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Bill Overview

Analyzed Economic Effects

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

Hospital donors get personal tax credits

Beginning January 1, 2026, individual donors get Alabama tax credits equal to 100% of qualified rural hospital donations. The yearly limit is $15,000 for single, head-of-household, and married-filing-separately taxpayers, or $30,000 for joint filers. Credits offset tax owed, rather than providing a payment beyond your tax bill. Unused credits carry forward for up to three years after the donation and cannot be transferred. The Department of Revenue must preapprove donations within hospital and statewide limits. Statewide credit caps are $20 million for 2026, $25 million for 2027, and $30 million each year afterward.

Businesses get rural hospital donation credits

Starting in tax year 2026, businesses get credits for qualified rural hospital donations against eligible Alabama taxes. These include income, financial institution excise, insurance premium, and specified utility taxes. Electing pass-through businesses get a 100% credit up to $450,000 yearly, with owner allocations based on ownership and applicable limits. Corporations have a $500,000 yearly cap and tax-specific limits of 100% or 75% of corporate tax liability. Financial institution credits are limited to the state share of their excise tax liability. Utility donors need a direct-pay permit, must provide a permit copy, and must notify the department about each donation. For utility credits, recipients must certify receipt within 30 business days, and the department must confirm eligibility within 30 business days. Utility donors cannot use reserved credits before the department’s notice. All credits are limited by applicable tax liability and shared program caps. Unused credits carry forward for up to three years and cannot be transferred.

Rural hospitals get donation support with safeguards

Alabama creates a rural hospital donation program, overseen by a board in the State Treasurer’s office. It uses donor tax credits, not a direct state appropriation. Eligible hospitals must be state-licensed rural general acute care, rural emergency, or critical access hospitals in federally defined rural areas. They must serve Medicare and Medicaid patients without discrimination and care for indigent patients regardless of ability to pay. Hospitals must submit five-year financial plans and meet reporting and audit rules. Each year, local government support must equal at least 10% of program aid; only 5% of that support can be in-kind. Donations must be unrestricted funds used for local healthcare, including operations, maintenance, and upgrades. Tax-exempt third parties can collect or manage donations, but yearly fees cannot exceed 5% of donations received. They must give potential donors the full eligible hospital list, even for hospitals they do not represent. Annual hospital contribution caps are $750,000 in 2026, $1 million in 2027, and $1.25 million afterward. The board ranks hospitals by financial need; undesignated donations and amounts above a chosen hospital’s cap go to eligible hospitals by rank. Hospitals must report donations within 30 days and file annual donation, donor, spending-plan, and fundraising-fee reports beginning March 2027. The Department of Revenue publishes program rules, rankings, contribution totals, credit availability, and where undesignated contributions go. The board and department also report donations and tax credits to the Legislature each year.

Sponsors & Cosponsors

Sponsor

  • Terri Collins

    Republican • House

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 513 • No: 0

Senate vote • 5/6/2025

Singleton motion to Adopt - Adopted Roll Call 968

Yes: 34 • No: 0

Senate vote • 5/6/2025

Singleton motion to Adopt - Adopted Roll Call 967

Yes: 34 • No: 0

House vote • 5/6/2025

Collins Concur In and Adopt - Adopted Roll Call 1191

Yes: 103 • No: 0

Senate vote • 5/6/2025

Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 969

Yes: 34 • No: 0

House vote • 4/8/2025

Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 664

Yes: 103 • No: 0

House vote • 4/8/2025

Motion to Adopt - Adopted Roll Call 663

Yes: 102 • No: 0

House vote • 4/8/2025

Third Reading in House of Origin

Yes: 103 • No: 0

Actions Timeline

  1. Enacted

    5/14/2025House

  2. Signature Requested

    5/7/2025Senate

  3. Delivered to Governor

    5/7/2025House

  4. Finance and Taxation Education 1st Amendment Offered

    5/6/2025Senate

  5. Finance and Taxation Education 2nd Amendment Offered

    5/6/2025Senate

  6. Singleton motion to Adopt - Adopted Roll Call 967

    5/6/2025Senate

  7. Singleton motion to Adopt - Adopted Roll Call 968

    5/6/2025Senate

  8. Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 969

    5/6/2025Senate

  9. Collins Concur In and Adopt - Adopted Roll Call 1191

    5/6/2025House

  10. Ready to Enroll

    5/6/2025House

  11. Enrolled

    5/6/2025House

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

    5/1/2025Senate

  13. Finance and Taxation Education 1st Amendment

    4/30/2025Senate

  14. Finance and Taxation Education 2nd Amendment

    4/30/2025Senate

  15. Reported Out of Committee Second House

    4/30/2025Senate

  16. Read for the first time and referred to the Senate Committee on Finance and Taxation Education

    4/9/2025Senate

  17. Pending Committee Action in Second House

    4/9/2025Senate

  18. Third Reading in House of Origin

    4/8/2025House

  19. Ways and Means Education Engrossed Substitute Offered

    4/8/2025House

  20. Motion to Adopt - Adopted Roll Call 663

    4/8/2025House

  21. Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 664

    4/8/2025House

  22. Engrossed

    4/8/2025House

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

    4/3/2025House

  24. Ways and Means Education 1st Substitute

    4/2/2025House

  25. Ways and Means Education 1st Amendment

    4/2/2025House

Bill Text

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