Alabama Small Business and Agribusiness Jobs Act

By Matt Capone

With all the changes to the federal tax code beginning in 2018, do not forget about the new Alabama tax credit available in tax year 2017.  Small businesses organized or qualified to do business in Alabama, with its headquarters or principal place of business in Alabama and have 75 or fewer employees could be eligible for the tax credit.  Employers would receive an income tax credit of $1,500 for each qualified new employee.  To qualify for the tax credit, an employer must have a net increase in total number of full time employees residing in Alabama for the tax year over the number employed in Alabama on July 24, 2016.A qualified new employee is a new employee hired after July 25, 2016 by an Alabama small business employer that is employed on a full time basis for a time period of twelve consecutive months, an Alabama resident, received wages from the Alabama small business employer that is equal to or exceeds $40,000 and was not a full time employee of the Alabama small business employer during any time twelve months prior to the start of this qualifying time period.

Note that an Alabama small business employer may receive a credit under the Alabama Small Business and Agribusiness Jobs Act or under the Full Employment Act of 2011 but not both for the same eligible employee.  Once a credit is claimed for an employee under one Act, the employer cannot claim a credit for that same employee under the other Act.  This is important because the credit under the Full Employment Act of 2011 is $1,000 versus the $1,500 available under the Alabama Small Business and Agribusiness Jobs Act.  The tax credit under the Alabama Small Business and Agribusiness Jobs Act is set to expire on January 1, 2019.