Taxation; to establish an income tax credit for oyster shell recycling

HB28 ENGROSSED
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HB28
2JV3QKS-2
By Representative Brown
RFD: Ways and Means Education
First Read: 13-Jan-26
PFD: 11-Aug-25
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PFD: 11-Aug-25
A BILL
TO BE ENTITLED
AN ACT
Relating to income tax; to establish a tax credit for
restaurants that recycle oyster shells.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. The Legislature finds and declares that
oyster shell material is a beneficial natural resource for
local water quality, aquatic habitats, and the protection of
the coastline of this state. An income tax credit for
restaurants that participate in approved oyster recycling
programs would incentivize the facilitation of more of this
resource to the benefit of the state.
Section 2. (a) For purposes of this section, the
following terms have the following meanings:
(1) DEPARTMENT. The Alabama Department of Revenue.
(2) INCOME TAX. The tax imposed by Chapter 18 of Title
40, Code of Alabama 1975.
(3) OYSTER SHELL RECYCLING PROGRAM. The Oyster Shell
Recycling Program or any other oyster shell recycling program
or activity designated by rule by the Alabama Department of
Revenue as an approved program or activity.
(4) OTHER ELIGIBLE PERSON. A state resident who
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(4) OTHER ELIGIBLE PERSON. A state resident who
possesses a valid license or permit issued pursuant to Section
9-12-82, 9-12-87, or 9-12-125, Code of Alabama 1975.
(5) RESTAURANT. A facility that prepares and sells food
directly to consumers for immediate consumption.
(b)(1) A restaurant or other eligible person that
donates oyster shell material to an oyster shell recycling
program may claim a credit against the state income tax
liability as provided by this section. The amount of the
credit shall equal the lesser of:
a. One dollar ($1) for every 50 pounds of oyster shell
material donated to a qualifying oyster shell recycling
program or activity during the tax year; or
b. Two thousand dollars ($2,000).
(2) The total amount of credits granted shall not
exceed one hundred thousand dollars ($100,000) per calendar
year.
(3) The granting of the tax credits authorized by this
section shall be on a first-come, first-served basis for the
tax year in which the oyster shell recycling occurred.
(c) If the amount of the credit exceeds the amount of
the taxpayer's tax liability for the taxable year, the excess
tax credit amount shall constitute an overpayment as defined
in Section 40-18-79, Code of Alabama 1975, and the department
shall refund the overpayment from the collections of the taxes
imposed.
(d) No tax credit provided by this section may be
transferred or sold to another taxpayer.
(e) The department shall do the following:
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(e) The department shall do the following:
(1) Provide a standardized format for a certificate to
be signed by the restaurant and certified by the Oyster Shell
Recycling Program to indicate the amount of oyster shells
recycled to substantiate the credit being claimed.
(2) Require the taxpayer to provide a copy of the
certificate when claiming the tax credit pursuant to this
section. Failure to file the required certificate shall result
in the automatic denial of the credit.
(f) The credit authorized in this section may be
claimed by corporations, individuals, and other entities in
accordance with the following provisions:
(1) An entity taxed as a corporation for Alabama income
tax purposes shall claim any credit authorized by this section
on its corporation income tax return.
(2) An individual shall claim any credit authorized by
this section on its income tax return.
(3) An entity taxed as a partnership, S-corporation, or
electing pass-through entity shall pass through any credit
authorized by the section to the partners, members, or
shareholders on a pro rata share basis.
(g) The department shall adopt rules to implement the
provisions of this section. The department shall engage and
collaborate with the Commissioner of the Department of
Conservation and Natural Resources and may incorporate
recommendations of the commissioner in any rules designating
oyster shell recycling programs and activities.
(h) The tax credit allowed under this section may be
claimed beginning with the 2027 tax year and may not be
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claimed beginning with the 2027 tax year and may not be
claimed for tax years after the 2031 tax year.
Section 3. This act shall become effective on June 1,
2026.
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2026.
House of Representatives
Read for the first time and referred
to the House of Representatives
committee on Ways and Means
Education
................13-Jan-26
Read for the second time and placed
on the calendar:
1 amendment
................14-Jan-26
Read for the third time and passed
as amended
Yeas 101
Nays 0
Abstains 1
................20-Jan-26
John Treadwell
Clerk
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