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HB379 ENROLLED
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HB379
SL9RY87-2
By Representative Collins
RFD: Ways and Means Education
First Read: 03-Feb-26
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First Read: 03-Feb-26
Enrolled, An Act,
Relating to the Entertainment Industry Incentive Act of
2009; to amend Sections 41-7A-42, 41-7A-43, 41-7A-46,
41-7A-47, 41-7A-48,and 41-7A-49, Code of Alabama 1975, to
provide an additional incentive program for small productions;
to clarify the eligibility of compensation to loan out
companies; and to extend the deadline for the Entertainment
Industry Incentive Act review and evaluation.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Sections 41-7A-42, 41-7A-43, 41-7A-46,
41-7A-47, 41-7A-48, and 41-7A-49, Code of Alabama 1975, are
amended to read as follows:
"§41-7A-42
For purposes of this article, the following terms have
the following meanings:
(1) COMPANY. A corporation, partnership, limited
liability company, or any other business entity.
(2) DEPARTMENT. The Alabama Department of
Commerce Revenue .
(3) ENTERTAINMENT INDUSTRY. Those persons or entities
engaged in the production of entertainment content as defined
under paragraph (8)a.
(4) EXPENDED IN ALABAMA. In the case of tangible
property, property that is acquired or leased from a source
within the State of Alabama; in the case of services, services
performed for a qualified production project in the State of
Alabama.
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Alabama.
(5) OFFICE. The Alabama Entertainment Office.
(6) PAYROLL. All salary, wages, and other compensation,
including related benefits, including specifically, but not
limited to, compensation and benefits provided to resident and
nonresident producers, directors, writers, actors, and other
personnel involved in qualified production projects in the
State of Alabama. For the purpose of the rebate for qualified
production companies computed under Section 41-7A-43, other
compensation includes payments to a loan-out company by a
qualified production company only if:
a. The qualified production company withheld and
remitted Alabama withholding tax at the highest rate levied in
Section 40-18-71 on all payments to the loan-out company for
services performed in this state. The amount withheld is
considered to have been withheld by the loan-out company on
wages paid to its employees for services performed in this
state; or
b. The qualified production company withheld and
remitted Alabama income tax at the highest rate levied in
Section 40-18-5, or Section 40-18-31 in the case of a C
corporation, on all payments to the loan-out company for
services performed in this state. The amount withheld on
payments to the loan-out company and remitted to the State of
Alabama shall satisfy the loan-out company's requirement to
make estimated income tax payments under Section 40-18-80.1 in
the case of C corporation or Electing Pass-Through Entity, and
Section 40-18-80 in the case of an individual, if the loan-out
company is a Single Member LLC or independent contractor, and
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company is a Single Member LLC or independent contractor, and
the requirement to pay composite tax on nonresident members of
a pass-through entity under Section 40-18-24.2.
(7) PRODUCTION EXPENDITURES.
a. The term includes preproduction, production, and
postproduction expenditures incurred in the State of Alabama
which are directly used in a state-certified production,
including, but not limited to, the following: Set construction
and operation, wardrobe, makeup, set accessories, and related
services; costs associated with photography and sound
synchronization, lighting, and related services and materials;
editing and related services; rental of facilities and
equipment; leasing of vehicles; costs of food and lodging;
costs of catering; digital or tape editing, film processing,
transfer of film to tape or digital format; transfer direct to
DVD, cable, or satellite for distribution; sound mixing,
special and visual effects including duplication, film
processing digital, DVD, music composition, and satellite
distribution; total aggregate payroll; music; airfare;
insurance costs of bonding; or other similar production
expenditures as determined by rule or regulation.
b. The term includes financial contributions or
educational or workforce development in partnership with
related educational institutions, or local industry
organizations, or both, contributed toward the furtherance of
the local entertainment media industries.
c. The term does not include postproduction
expenditures for marketing or any amounts that are paid to
persons or entities as a result of their participation in
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persons or entities as a result of their participation in
profits from the exploitation of a motion picture production.
d. This term does not include other compensation paid
to a loan-out company by a qualified production company if the
qualified production company does not withhold and remit
either the Alabama withholding tax at the highest rate levied
in 40-18-71 or Alabama income tax at the highest rate levied
in Section 40-18-5, or Section 40-18-31 in the case of a C
corporation. A loan-out company shall file the applicable
Alabama withholding tax and/or income tax returns for the
taxable year in which such services were performed. A loan-out
company's failure to file an Alabama income tax return shall
not disqualify payments made to that loan-out company for the
rebate computed under Section 41-7A-43.
(8) QUALIFIED PRODUCTION.
a. The term means entertainment content created in
whole or in part within the state, including motion pictures;
soundtracks for motion pictures; documentaries; long-form,
specials, miniseries, series, sound recordings, music albums,
videos and music videos, and interstitials television
programming; interactive television; interactive games; video
games; commercials; infomercials; any format of digital media,
including an interactive website that is intended for national
or international distribution or exhibition to the general
public; and any trailer, pilot, video teaser, or demo created
primarily to stimulate the sale, marketing, promotion, or
exploitation of future investment in either a product or a
qualified production via any means and media in any digital
media format, film, or videotape, provided such program meets
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media format, film, or videotape, provided such program meets
all the underlying criteria of a qualified production.
b. The term does not include any ongoing television
program created primarily as news, weather, or financial
market reports, a production featuring current events,
sporting events, an awards show or other gala event, a
production whose sole purpose is fundraising, a long-form
production that primarily markets a product or service, a
production used for corporate training or in-house corporate
advertising or other similar productions; nor does the term
include any production for which records are required to be
maintained under 18 U.S.C. § 2257 with respect to sexually
explicit content; nor does the term mean or include any form
of gambling, gaming, wagering, or pari-mutuel wagering
activity or enterprise.
(9) QUALIFIED PRODUCTION COMPANY.
a. The term means a company engaged in the business of
producing a qualified production, as that term is defined.
b. The term does not mean or include any company owned,
affiliated, or controlled, in whole or in part, by any company
or person that is in default on a loan.
(10) RESIDENT OF ALABAMA. A natural person and, for the
purpose of determining eligibility for the incentives provided
by this article, any person domiciled in the State of Alabama
and any other person who maintains a permanent place of abode
within the state and spends in the aggregate more than six
months of each year within the State of Alabama.
(11) STATE-CERTIFIED PRODUCTION. A qualified production
approved by the office, produced by a qualified production
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approved by the office, produced by a qualified production
company."
"§41-7A-43
(a) Beginning January 1, 2009, a qualified production
company shall be entitled to a rebate for production
expenditures, as defined in Section 41-7A-42, related to a
state-certified production. The rebate shall be equal to 25
percent of the state-certified production's production
expenditures excluding payroll paid to residents of Alabama
plus 35 percent of all payroll paid to residents of Alabama
for the state-certified production, provided the total
production expenditures for a project must equal or exceed at
least five hundred thousand dollars ($500,000), but no rebate
shall be available for production expenditures incurred after
the first twenty million dollars ($20,000,000) of production
expenditures expended in Alabama on a state-certified
production.
(b) Each year, the office may reserve up to two million
dollars ($2,000,000) for small budget qualified productions. A
qualified production company shall be entitled to a rebate
equal to 45 percent of payroll paid to residents of Alabama
for the state-certified production, provided the total
production expenditures for such small budget qualified
production must equal to or exceed at least one hundred
thousand dollars ($100,000), but shall not be available if the
total production expenditures exceed four hundred ninety-nine
thousand nine hundred ninety-nine dollars ($499,999).
(b)(c) A single episode in a television series or
miniseries may be considered a single production project for
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miniseries may be considered a single production project for
purposes of this section. However, in determining the total
production expenditures incurred by a qualified production
company on a qualified production, the total production
expenditures of a television series or miniseries, whether a
single season or multiple seasons thereof, to be filmed within
a period of 12 consecutive months, each individual episode of
which separately and independently meets the definition of a
qualified production, may be aggregated to meet the monetary
requirements set forth in subsection (a) as long as each
individual episode within the series pertains to the same
subject as the other episodes in the series.
(c)(d) A single commercial may be considered a single
production project for purposes of this section. However, in
determining the total production expenditures incurred by a
qualified production company on a qualified production, the
total production expenditures of a series of commercials to be
filmed within a period of 12 consecutive months, each of which
separately and independently meets the definition of a
qualified production, may be aggregated to meet the monetary
requirements set forth in subsection (a) as long as each
individual commercial within the series pertains to the same
subject as the other commercials in the series and was planned
as part of a series of commercials to be filmed within a
period of 12 consecutive months at the time the qualified
production company applied for the incentives.
(d)(e) A qualified production company shall be entitled
to the rebate for production expenditures as provided in
subsection (a) for a qualified project that is limited only to
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subsection (a) for a qualified project that is limited only to
the production of a soundtrack used in a motion picture or
documentary, provided that the production expenditures for the
soundtrack project must equal or exceed at least fiftythirty
thousand dollars ($50,000) ($30,000) , but no rebate shall be
available for production expenditures incurred after the first
threetwo hundred thousand dollars ($300,000) ($200,000) of
production expenditures expended in Alabama.
(e)(f) A qualified production company shall be entitled
to the rebate for production expenditures as provided in
subsection (a) for a qualified project that is limited only to
the production of a music video, provided that the production
expenditures for the music video equal or exceed fiftythirty
thousand dollars ($50,000) ($30,000) , but no rebate shall be
available for production expenditures incurred after the first
two hundred thousand dollars ($200,000) of production
expenditures expended in Alabama.
(f)(g) A qualified production company shall be entitled
to the rebate for production expenditures as provided in
subsection (a) for a qualified project that is limited only to
the production of a music album, provided that the production
expenditures for the music album equal or exceed thirty
thousand dollars ($30,000), but no rebate shall be available
for production expenditures incurred after the first two
hundred thousand dollars ($200,000) of production expenditures
expended in Alabama.
(g)(h) The rebate described in this section may be
applied to offset any income tax liability applicable to a
qualified production company for the tax year in which
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qualified production company for the tax year in which
production activity in Alabama on the state-certified
production concludes.
(h)(i) If the rebate available under this section
exceeds a qualified production company's Alabama income tax
liability for the tax year in which production activity in
Alabama concludes on the state-certified production, the
excess of the rebate over a qualified production company's
Alabama income tax liability shall be rebated to the qualified
production company.
(i)(j) The department Department of Commerce and the
Commissioner of the Department of Revenue shall adopt rules
necessary to administer this section."
"§41-7A-46
(a) A qualified production company that intends to
produce all or any part of a qualified production project in
Alabama and desires to be exempted from the payment of state
sales, use, and lodging taxes levied pursuant to Sections
40-23-2, 40-23-61, and 40-26-1, respectively, shall provide an
estimate of total expenditures expected to be made in Alabama
in connection with the production project. The estimate of
expenditures shall be filed with the office before the
commencement of the project in Alabama.
(b) At the time the qualified production company
provides the estimate of expenditures to the department office ,
it also shall designate a member or representative of the
company to work with the office and the department on
reporting of expenditures and other information necessary to
take advantage of the sales, use, and lodging tax exemptions
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take advantage of the sales, use, and lodging tax exemptions
afforded by this article.
(c)(1) An application for the sales, use, and lodging
tax exemptions provided in this article may be accepted only
from those qualified production companies that report
anticipated expenditures in the State of Alabama in the
aggregate equal to or exceeding one hundred fifty thousand
dollars ($150,000) in connection with the production of one or
more qualified production projects in the State of Alabama
within a consecutive 12-month period.
(2) The application shall be approved by the office.
(3) Once the application is approved by the office, the
department shall issue sales, use, and lodging tax exemption
certificates to the qualified production company as evidence
of the exemptions. The exemptions are effective on the date
the certificate is issued by the department.
(d) A qualified production company that is approved and
receives sales, use, and lodging tax exemption certificates,
but fails to expend one hundred fifty thousand dollars
($150,000) within a consecutive 12-month period, is liable for
the sales, use, and lodging taxes that would have been paid
had the approval not been granted; except that the company
must be given a 60-day period in which to pay the sales, use,
and lodging taxes without incurring penalties. The sales, use,
and lodging taxes are considered due as of the date the
tangible personal property was purchased in or brought into
Alabama for use, storage, or consumption for purposes of state
sales and use taxes and due as of the date that lodgings occur
for purposes of state lodging taxes.
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for purposes of state lodging taxes.
(e) Upon completion of a qualified production, the
company shall return the sales, use, and lodging tax exemption
certificates to the department and submit a report to the
office of the actual expenditures made in Alabama in
connection with the qualified production.
(f) Notwithstanding Act 98-192, the sales and use tax
exemption provided for in this article shall only apply to the
state sales and use tax."
"§41-7A-47
The department Department of Commerce and the office may
collectively promulgate adopt rules as are necessary to
implement and administer this article."
"§41-7A-48
(a) For the fiscal year ending September 30, 2015,
through the fiscal year ending September 30, 2025, the
aggregate cap of incentives granted under this article shall
not exceed twenty million dollars ($20,000,000) for all
qualified production companies. For the fiscal year ending
September 30, 2026, and all subsequent fiscal years, the
aggregate cap of incentives granted under this article shall
not exceed twenty-two million dollars ($22,000,000) for all
qualified production expenditures.
(b) For the fiscal year ending September 30, 2026, and
all subsequent fiscal years, two million dollars ($2,000,000)
of the amounts in subsection (a) shall be reserved for music
albums. In the event applications are not received and
incentives are not allocated for music albums by July 1 of
each year, the funds may be used for rebates to other
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each year, the funds may be used for rebates to other
qualified production companies.
(c) Any unspent incentives under this article in a
fiscal year shall be carried over to the following fiscal
year, provided that the total amount carried over in any
fiscal year does not exceed three million dollars
($3,000,000).
(d) In addition to any reporting required by existing
law for this article, the Department of Commerce shall
contract with an out-of-state entity to review and evaluate
this program and report the findings to the Legislature by the
1st legislative day of the 20272028 Regular Legislative
Session."
"§41-7A-49
(a) The Entertainment Industry Incentive Act of 2009,
Article 3, commencing with Section 41-7A-40, Chapters 7A, of
Title 41, is repealed effective December 31, 2028, unless
extended by an act of the Legislature. Prior to the repeal of
the incentive, the Department of Commerce shall report to the
Legislature beginning in 2023 and annually thereafter,
regarding the entertainment industry incentives, in accordance
with Section 40-1-50.
(b) The repealing of the incentives in subsection (a)
shall only affect the availability of the tax credits after
December 31, 2028, and shall not cause a reduction or
suspension of any credits awarded on or prior to December 31,
2028.
(c) On an annual basis, the department shall furnish
the Department of Commerce with a list of each qualified
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the Department of Commerce with a list of each qualified
production company that has claimed the incentive under this
act.
(1) The Department of Commerce shall use the
information received under subsection (c) solely for the
purposes of economic development planning and program
evaluation.
(2) To ensure taxpayer confidentiality, all information
shared under this section shall remain subject to the
confidentiality provisions of Section 40-2A-10, Code of
Alabama 1975. The Department of Commerce shall implement
safeguards to ensure that taxpayer information is not
disclosed to unauthorized persons or entities. "
Section 2. This act shall become effective on October
1, 2026.
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1, 2026.
________________________________________________
Speaker of the House of Representatives
________________________________________________
President and Presiding Officer of the Senate
House of Representatives
I hereby certify that the within Act originated in and
was passed by the House 03-Mar-26.
John Treadwell
Clerk
Senate 07-Apr-26 Passed
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