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HB399 ENROLLED
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HB399
I3SA7ZZ-3
By Representatives Hulsey, Rafferty, Tillman, Mooney, DuBose,
Carns, Robertson, Hammett, Crow, Stringer, Brinyark, Kirkland,
Bedsole
RFD: Transportation, Utilities and Infrastructure
First Read: 05-Feb-26
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First Read: 05-Feb-26
Enrolled, An Act,
Relating to tax abatements and economic development; to
amend Sections 40-9B-3, 40-9B-4, and 40-9B-4.1, Code of
Alabama 1975, relating to tax abatements for data processing
centers; and to amend Section 40-23-35, Code of Alabama 1975,
relating to the distribution of sales taxes; to limit the
maximum exemption period for abatements available to data
processing centers to 20 years beginning January 1, 2027; to
provide for the collection of the state noneducational ad
valorem taxes and sales and use tax levied pursuant to Chapter
23 of this title on purchases of building materials, building
fixtures, structural components, real property improvements,
power infrastructure for transformation, distribution, or
management of electricity, backup power generation systems,
and battery systems made by certain large data processing
centers beginning January 1, 2027; to extend the sunset date
applicable to abatements for data processing centers; and to
make nonsubstantive, technical revisions to update existing
code language to current style.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Sections 40-9B-3, 40-9B-4, and 40-9B-4.1,
Code of Alabama 1975, are amended to read as follows:
"§40-9B-3
(a) For purposes of this chapter, the following words
and phrases mean:
(1) ABATE, ABATEMENT. A reduction or elimination of a
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(1) ABATE, ABATEMENT. A reduction or elimination of a
taxpayer's liability for tax or payments required to be made
in lieu thereof. An abatement of transaction taxes imposed
under Chapter 23 of this title, or payments required to be
made in lieu thereof, shall relieve the seller from the
obligation to collect and pay over the transaction tax as if
the sale were to a person exempt, to the extent of the
abatement, from the transaction tax.
(2) ALTERNATIVE ENERGY RESOURCES. The definition given
in Section 40-18-1.
(3) CONSTRUCTION RELATED TRANSACTION TAXES. The
transaction taxes imposed by Chapter 23 of this title, or
payments required to be made in lieu thereof, on tangible
personal property and taxable services incorporated into an
industrial development property, the cost of which may be
added to capital account with respect to the property,
determined without regard to any rule which permits
expenditures properly chargeable to capital account to be
treated as current expenses.
(4) DATA PROCESSING CENTER. An establishment at which
not less than 20 new jobs are located, the average annual
total compensation, including benefits, of such new jobs to be
not less than forty thousand dollars ($40,000) and such
establishment is engaged in the provision of complete
processing and specialized reports from data, the provision of
automated data processing and data entry services, the
provision of an infrastructure for hosting or data processing
services, the provision of specialized hosting activities, the
provision of application service provisioning, the provision
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provision of application service provisioning, the provision
of general time-share mainframe facilities, the provision or
operation of computer equipment or enabling software for the
processing, storage, backup, retrieval, communication, or
distribution of data, or some combination of the foregoing,
without regard to whether any other activities are conducted
at the establishment.
(5) EDUCATION TAXES. Ad valorem taxes, or payments
required to be made in lieu thereof, that must, pursuant to
the Constitution of Alabama of 1901, as amended, legislative
act, or the resolution or other action of the governing board
authorizing the tax, be used for educational purposes or for
capital improvements for education and local construction
related transaction taxes levied for educational purposes or
for capital improvements for education.
(6) HEADQUARTERS FACILITY. Any trade or business
described in NACIS Code 551114, at which not less than 50 new
jobs are located.
(7) HYDROPOWER PRODUCTION. The definition given in
Section 40-18-1.
(8) INDUCEMENT. Refers to an agreement, or an
"inducement agreement," entered into between a private user
and a public authority or county or municipal government
and/or a resolution or other official action, an "inducement
resolution," "inducement letter," or "official action" adopted
by a public authority or county or municipal government, in
each case expressing, among other things, the present intent
of such public authority or county or municipal government to
issue bonds in connection with the private use property
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issue bonds in connection with the private use property
therein described. Notwithstanding any provision in this
chapter to the contrary, neither an inducement nor a request
for inducement shall be required to apply for, grant, or
receive any abatement of taxes allowed to be abated under this
chapter.
(9) INDUSTRIAL DEVELOPMENT PROPERTY. Real and/or
personal property acquired in connection with establishing or
expanding an industrial or research enterprise in Alabama.
(10) INDUSTRIAL OR RESEARCH ENTERPRISE.
a. Any trade or business predominately consisting of
any one or more of the following:
1. Described by NAICS Code 1133, 115111, 2121, 22111,
221330, 31 (other than 311811), 32, 33, 423, 424, 482, 4862,
48691, 48699, 48819, 4882, 4883 (other than 48833), 493, 511,
5121 (other than 51213), 51221, 517, 518 (without regard to
the premise that data processing and related services be
performed in conjunction with a third party), 51913, 52232,
54133 (if predominantly in furtherance of another activity
described in this article), 54134 (if predominantly in
furtherance of another activity described in this article),
54138, 5415, 541614, 5417, 55 (if not for the production of
electricity), 561422 (other than establishments that originate
telephone calls), 562213, 56291, 56292, 611512, 927, or 92811.
2. A target of the state's economic development efforts
pursuant to either of the following:
(i) The Accelerate Alabama Strategic Economic
Development Plan adopted in January 2012 by the Alabama
Economic Development Alliance, created by Executive Order
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Economic Development Alliance, created by Executive Order
Number 21 of the Governor on July 18, 2011, or any amended
version or successor document thereto; or
(ii) A type listed in a regulation adopted by the
Department of Commerce, other than a regulation submitted as
an emergency rule.
Notwithstanding the foregoing, the activities described
in this definition shall not predominantly concern farming
activities involving trees, animals or crops, nor the retail
sale of tangible personal property or services. This provision
shall not be deemed to exclude customer service centers or
call centers otherwise allowed or provided for herein.
b. With respect to abatements granted in accordance
with Section 40-9B-9, and only with respect to such
abatements, "industrial or research enterprise" means any
trade or business described in NAICS Code 493, 488310, or
488320, when such trade or business is conducted on premises
in which the Alabama State Port Authority has an ownership,
leasehold, or other possessory interest and such premises are
used as part of the operations of the Alabama State Port
Authority.
c. "Industrial or research enterprise" includes the
above-described trades and business and any others as may
hereafter be reclassified in any subsequent publication of the
NAICS or similar industry classification system developed in
conjunction with the United States Department of Commerce or
Office of Management and Budget.
d. "Industrial or research enterprise" also includes
any underground natural gas storage facility which is located
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any underground natural gas storage facility which is located
in the Gulf Opportunity Zone, as that phrase is defined in the
Gulf Opportunity Zone Act of 2005, developed from existing
geologic reservoirs, including, without limitation, salt
domes, and placed in service on or before December 31, 2013.
e. "Industrial or research enterprise" also includes
any plant, property, or facility that meets both of the
following:
1. It produces electricity from:
(i) Alternative energy resources and has capital costs
of at least one hundred million dollars ($100,000,000); or
(ii) Hydropower production and has capital costs of at
least five million dollars ($5,000,000).
2. All or a portion of the plant, property, or facility
is owned by one or more of the following:
(i) A utility described in Section 37-4-1(7)a.,
(ii) An entity organized under the provisions of
Chapter 6 of Title 37,
(iii) An authority both organized and existing pursuant
to the provisions of Chapter 50A of Title 11 and subject to
the payments required to be made in lieu of ad valorem, sales,
use, license, and severance taxes imposed by Section 11-50A-7,
or
(iv) An entity in which one or more of the foregoing
owns an interest.
f. "Industrial or research enterprise" also includes
any headquarters facility.
g. "Industrial or research enterprise" also includes
any data processing center.
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any data processing center.
h. "Industrial or research enterprise" also includes
any research and development facility.
i. "Industrial or research enterprise" also includes
any renewable energy facility.
j. "Industrial or research enterprise" also includes
any tourism destination attraction.
(11) MAJOR ADDITION. Any addition to an existing
industrial development property that equals the lesser of: 30
percent of the original cost of the industrial development
property or two million dollars ($2,000,000). For purposes of
this subsection, the original cost of existing industrial
development property shall be the amount of industrial
development property with respect to which an abatement was
granted under this chapter when the property was constructed,
or if the existing industrial development property was
constructed before January 1, 1993, the maximum amount that
would have been allowed if the provisions of this chapter had
applied at the time it was constructed. Only property that
constitutes industrial development property shall be taken
into account in making the determination in the previous
sentence. Major addition shall include any addition costing at
least two million dollars ($2,000,000) which constitutes an
industrial or research enterprise, regardless of whether added
to an existing industrial development property.
(12) MAXIMUM EXEMPTION PERIOD. Except as provided in
Section 40-9B-11, a period equal to the shorter of:
a. Either of the following:
1. Twenty years from and after: (i) The date of initial
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1. Twenty years from and after: (i) The date of initial
issuance by a county, city, or public authority of bonds to
finance any costs of a private use property ,; or (ii) If no
such bonds are ever issued, the later of: A. The date on which
title to the property was acquired by or vested in the county,
city, or public authority ,; or B. The date on which the
property is or becomes owned, for federal income tax purposes,
by a private user ; or.
2. Exclusively with respect to one or more private
users of a data processing center, the following:
(i) A period of 10 years from and after the date on
which private use property is or becomes owned, for federal
income tax purposes, by such private user or users (including
the lessor and any lessee with respect to co-location
centers), if the aggregate capital investment in the data
processing center by such private user or users does not
exceed two hundred million dollars ( $200,000,000 ) within 10
years from the date on which a private user commences the
acquisition, construction, and equipping of the data
processing center ,.
(ii) AFor any abatement granted prior to January 1,
2027, a period of 20 years from and after the date on which
private use property is or becomes owned, for federal income
tax purposes, by such private user or users (including the
lessor and any lessee with respect to co-location centers), if
the aggregate capital investment in the data processing center
by such private user or users exceeds two hundred million
dollars ( $200,000,000 ) but is not greater than four hundred
million dollars ( $400,000,000 ) within 10 years from the date
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million dollars ( $400,000,000 ) within 10 years from the date
on which a private user commences the acquisition,
construction, and equipping of the data processing center . For
any abatement granted on or after January 1, 2027, a period of
20 years from and after the date on which the private use
property is or becomes owned, for federal income tax purposes,
by such private user or users, including the lessor or any
lessee with respect to co-location centers, if the aggregate
capital investment in the data processing center by such
private user or users exceeds two hundred million dollars
($200,000,000) within 10 years from the date on which a
private user commences the acquisition, construction, and
equipping of the data processing center , or.
(iii) AFor any abatement granted until January 1, 2027,
a period of 30 years from and after the date on which private
use property is or becomes owned, for federal income tax
purposes, by such private user or users , (including the lessor
and any lessee with respect to co-location centers ), if the
aggregate capital investment in the data processing center by
such private user or users exceeds two hundred million dollars
($200,000,000 ) within 10 years from the date on which a
private user commences the physical work of constructing and
equipping the data processing center and exceeds four hundred
million dollars ( $400,000,000 ) within 20 years from the date
on which a private user commences the acquisition,
construction, and equipping of the data processing center.
This item (iii) shall not apply to any abatement granted after
January 1, 2027.
(iv) For abatements granted on or after January 1,
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(iv) For abatements granted on or after January 1,
2027, a private user or users may qualify for an additional 10
years of abatement, for a total maximum exemption period not
to exceed 30 years, if the private user or users: (1) satisfy
the capital investment thresholds contained in this section;
and (2) enter into a binding written agreement, approved by
the Department of Revenue, the Department of Commerce, and the
affected local governing body committing to provide qualified
local investments for the benefit of the benefited community.
The agreement shall describe the nature, timing, dollar value,
and verification procedures applicable to the qualified local
investments. Qualified local investments consists of:
A. Infrastructure improvements, including roads,
bridges, or other public facilities that support local
development;
B. Improvements to broadband in locations determined to
be an unserved area as defined in Section 41-23-212;
C. Water or wastewater system upgrades that serve the
local community; or
D. Local education support, including capital
improvements, equipment, or programmatic support for public
K-12 schools, public charter schools, career technical
centers, or community college programs that serve the
benefited community.
For purposes of this item (iv), "benefited community"
means: (1) the county in which the project is located; (2) any
municipality located in whole or in part within that county;
or (3) any county or municipality adjacent to the physical
project site as determined by the written agreement,
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project site as determined by the written agreement,
regardless of county lines, provided such jurisdiction
consents in writing to receive the investment. The county and,
as applicable, any municipality in which the project is
located, by mutual written agreement with any jurisdiction
described in this paragraph, may designate the recipient or
recipients of any portion of the qualified local investments.
If the private user or users fail to satisfy any
material obligation contained in the binding agreement
required under this item (iv), the additional 10-year
abatement authorized under this item (iv) shall be revoked,
and the abatement shall revert to the 20-year maximum
exemption period otherwise applicable. Upon such revocation,
the private user or users shall repay all state taxes abated
during the extended period, together with interest as provided
by law.
For purposes of this subparagraph 2., a private user's
aggregate capital investment in a data processing center shall
include all real and personal property comprising a data
processing center, the costs of which may be capitalized for
federal income tax purposes. In no event shall abatements of
construction related transaction taxes or noneducational ad
valorem taxes granted for a data processing center apply
beyond the expiration of the applicable maximum exemption
period; or
b. The period ending on the date on which the property
has ceased, for 6six consecutive months, to be used in the
active conduct of an industrial or research enterprise.
(13) MORTGAGE AND RECORDING TAXES. The taxes imposed by
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(13) MORTGAGE AND RECORDING TAXES. The taxes imposed by
Chapter 22 of this title.
(14) NAICS CODE. Any sector, subsector, industry group,
industry or national industry of the 2012 North American
Industry Classification System, or any similar classification
system developed in conjunction with the United States
Department of Commerce or Office of Management and Budget.
(15) NONEDUCATIONAL AD VALOREM TAXES. Ad valorem taxes,
or payments required to be made in lieu thereof, imposed by
the state, counties, municipalities, and other taxing
jurisdictions of Alabama that are not required to be used for
educational purposes or for capital improvements for
education.
(16) PERSON. Includes any individual, partnership,
trust, estate, or corporation.
(17) PRIVATE USER. Any individual, partnership, or
corporation organized for profit that is or will be treated as
the owner of private use property for federal income tax
purposes, any entity organized under Chapter 6 of Title 37,
and any authority both organized and existing pursuant to
Chapter 50A of Title 11 and subject to the payments required
to be made in lieu of ad valorem, sales, use, license, and
severance taxes imposed by Section 11-50A-7.
(18) PRIVATE USE INDUSTRIAL PROPERTY. Private use
property that also constitutes industrial development
property.
(19) PRIVATE USE PROPERTY. Any real and/or personal
property which is or will be treated as owned by a private
user for federal income tax purposes even though title may be
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user for federal income tax purposes even though title may be
held by a public authority or municipal or county government;
any real and/or personal property which is owned by any entity
organized under Chapter 6 of Title 37; and any real and/or
personal property which is owned by any authority both
organized and existing pursuant to Chapter 50A of Title 11,
and subject to the payments required to be made in lieu of ad
valorem, sales, use, license, and severance taxes imposed by
Section 11-50A-7.
(20) PUBLIC AUTHORITY. A corporation created for public
purposes pursuant to a provision of the Constitution of
Alabama of 1901, or a general or local law that authorized it
to issue bonds, the interest on which is exempt from the
Alabama income tax, as in effect on May 21, 1992.
(21) PUBLIC INDUSTRIAL AUTHORITY. A public authority
authorized to issue bonds to acquire, construct, equip, or
finance industrial development property.
(22) RENEWABLE ENERGY FACILITY. Any plant, property, or
facility that either:
a. Produces electricity or natural gas, in whole or in
part, from biofuels as such term is defined in Section
2-2-90(c)(2) or from renewable energy resources as such term
is defined in Section 40-18-1(30) with the exception that
hydropower production shall be excluded from such definition;
or
b. Produces biofuel as such term is defined in Section
2-2-90(c)(2).
(23) RESEARCH AND DEVELOPMENT FACILITY. An
establishment engaged in conducting original investigations
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establishment engaged in conducting original investigations
undertaken on a systematic basis to gain new knowledge or
applying research findings or other scientific knowledge to
create new or significantly improved products or processes, or
both.
(24) STATEMENT OF INTENT. A written statement of intent
to claim an abatement provided in this chapter, or to petition
for local tax abatement, relating to an industrial or research
enterprise described in paragraph e. of subdivision (10) of
this subsection that is filed with the Department of Revenue
at any time prior to the date on which the industrial or
research enterprise described in paragraph e. of subdivision
(10) of this subsection is placed in service in accordance
with such procedures and on such form or forms as may be
prescribed by the Department of Revenue. Such statement of
intent shall contain a description of the industrial or
research enterprise described in paragraph e. of subdivision
(10) of this subsection; the date on which the acquisition,
construction, installation, or equipping of the industrial or
research enterprise described in paragraph e. of subdivision
(10) of this subsection was commenced or is expected to
commence; the actual or, if not known, the estimated capital
costs of the industrial or research enterprise described in
paragraph e. of subdivision (10) of this subsection; the
number of new employees to be employed at the industrial or
research enterprise described in paragraph e. of subdivision
(10) of this subsection; and any other information required by
the Department of Revenue.
(25) TOURISM DESTINATION ATTRACTION. A commercial
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(25) TOURISM DESTINATION ATTRACTION. A commercial
enterprise which is open to the public not less than 120 days
during a calendar year and is designed to attract visitors
from inside or outside of the State of Alabama, typically for
its inherent cultural value, historical significance, natural
or man-made beauty, or entertainment or amusement
opportunities. The term shall include, but not be limited to,
a cultural or historical site; a botanical garden; a museum; a
wildlife park or aquarium open to the public that cares for
and displays a collection of animals or fish; an amusement
park; a convention hotel and conference center; a water park;
or a spectator venue or arena.
A tourism destination attraction shall not include a
facility primarily devoted to the retail sale of goods; a
shopping center; a restaurant; a movie theater; a bowling
alley; a fitness center; a miniature golf course; or a
nightclub. Provided, however, that the capital costs of the
construction of a tourism destination attraction may include
the capital costs associated with the construction of any
retail establishment, restaurant or other portion of the
tourism destination attraction. The term also does not include
any gaming facility or establishment that the Secretary of the
Department of Commerce deems to be serving the local
community.
(b) The abatements of ad valorem taxes, and payments in
lieu thereof, allowed by amendments to this section by Act
2008-275 shall become effective for projects for which
statements of intent are filed after December 31, 2011. No ad
valorem taxes, or payments in lieu thereof, shall be abated
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valorem taxes, or payments in lieu thereof, shall be abated
for periods prior to January 1, 2012. The other abatements
allowed by amendments made to this section by Act 2008-275
shall become effective after December 31, 2011.
For a qualifying industrial or research enterprise
described in Section 40-9B-3(a)(10)j., the approval of the
abatement of a specified ad valorem tax or construction
related tax levied or imposed by a county or municipality, or
payments required to be made in lieu thereof, shall take
effect only upon adoption of a resolution by the governing
body of that county or municipality approving such abatement
or abatements."
"§40-9B-4
(a) Noneducational ad valorem taxes, construction
related transaction taxes, except those local construction
related transaction taxes levied for educational purposes or
for capital improvements for education, and mortgage and
recording taxes, or payments required to be made in lieu
thereof, and in the case of a qualifying industrial or
research enterprise described in Section 40-9B-3(a)(10)e.
which is owned by an entity organized under Chapter 6 of Title
37, or by an authority both organized and existing pursuant to
Chapter 50A of Title 11, and subject to the payments required
to be made in lieu of ad valorem, sales, use, license, and
severance taxes imposed by Section 11-50A-7, in addition to
the foregoing, all other ad valorem taxes, or payments
required to be made in lieu thereof, imposed by the state,
counties, municipalities, and other taxing jurisdictions of
Alabama, may be abated with respect to private use industrial
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Alabama, may be abated with respect to private use industrial
property and security documents and other recordable documents
associated therewith as provided in this chapter.
(b)(1) No abatement of noneducational ad valorem taxes,
other ad valorem taxes, or payments required to be made in
lieu of the foregoing, may exceed the maximum exemption
period. No further abatement with respect to the same private
use industrial property may be granted unless there is a major
addition to the property, in which event abatement may be
granted only with respect to the noneducational ad valorem
taxes, and in the case of a qualifying industrial or research
enterprise described in Section 40-9B-3(a)(10)e. which is
owned by an entity organized under Chapter 6 of Title 37, or
by an authority both organized and existing pursuant to
Chapter 50A of Title 11, and subject to the payments required
to be made in lieu of ad valorem, sales, use, license, and
severance taxes imposed by Section 11-50A-7, in addition to
the noneducational ad valorem taxes, with respect to all other
ad valorem taxes, or payments required to be made in lieu
thereof, imposed by the state, counties, municipalities, and
other taxing jurisdictions of Alabama, on the major addition
by complying with the procedures set forth in this chapter.
Notwithstanding the immediately preceding sentence, with
respect to a data processing center, an abatement of
noneducational ad valorem taxes, other ad valorem taxes, or
payments required to be made in lieu thereof, shall apply to
all real and personal property comprising a data processing
center, the costs of which may be capitalized for federal
income tax purposes, acquired at any time during the
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income tax purposes, acquired at any time during the
applicable maximum exemption period, including, but not
limited to, computers, software licensed for use at the
qualifying data processing center, equipment supporting
computing, networking, or data storage; cooling systems,
cooling towers, and other temperature infrastructure; power
infrastructure for transformation, distribution, or management
of electricity used for the maintenance and operation of a
data processing center, including, but not limited to,
exterior dedicated business-owned substations, backup power
generation systems, battery systems, and related
infrastructure; and any other equipment necessary for the
maintenance and operation of a data processing center.
(2) Effective for an abatement granted: (i) on or
after January 1, 2027; and (ii) to a data processing center
with a total peak demand of 100 megawatts or greater, no
abatement of state noneducational ad valorem taxes shall
extend beyond the date the private use industrial property is
placed in service.
(c)(1) An abatement of construction related transaction
taxes, or payments required to be made in lieu thereof, shall
apply only to tangible personal property and taxable services
incorporated into a private use industrial property, the cost
of which may be added to capital account with respect to the
property, determined without regard to any rule which permits
expenditures properly chargeable to capital account to be
treated as current expenses. No abatement of construction
related transaction taxes, or payments required to be made in
lieu thereof, shall extend beyond the date the private use
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lieu thereof, shall extend beyond the date the private use
industrial property is placed in service; provided, however,
that an abatement of construction related transaction taxes,
or payments required to be made in lieu thereof, for a data
processing center shall apply to all taxable services and
acquisitions of real and personal property comprising the data
processing center, the costs of which may be capitalized for
federal income tax purposes, occurring at any time during the
applicable maximum exemption period, including, but not
limited to, computers, software licensed for use at the
qualifying data processing center, equipment supporting
computing, networking, or data storage; cooling systems,
cooling towers, and other temperature infrastructure; power
infrastructure for transformation, distribution, or management
of electricity used for the maintenance and operation of a
data processing center, including, but not limited to,
exterior dedicated business-owned substations, backup power
generation systems, battery systems, and related
infrastructure; and any other equipment necessary for the
maintenance and operation of a data processing center. No
further abatement may be granted for construction related
transaction taxes, or payments required to be made in lieu
thereof, with respect to the private use industrial property
unless incurred in connection with a major addition, in which
event only construction related transaction taxes, or payments
required to be made in lieu thereof, that may be added to
capital account with respect to the major addition, determined
without regard to any rule which permits expenditures properly
chargeable to capital account to be treated as current
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chargeable to capital account to be treated as current
expenses, may be abated by complying with the procedures set
forth in Act 92-599 as amended, and as amended by Act
2008-275. Except in the case of a qualifying industrial or
research enterprise described in Section 40-9B-3(a)(10)e.
which is owned by an entity organized under Chapter 6 of Title
37, or by an authority both organized and existing pursuant to
Chapter 50A of Title 11, and subject to the payments required
to be made in lieu of ad valorem, sales, use, license, and
severance taxes imposed by Section 11-50A-7, no local
construction related transaction taxes levied for educational
purposes or capital improvements for education, or payments
required to be made in lieu thereof, may be abated.
(2) a. Effective for an abatement granted: (i) on or
after January 1, 2027; and (ii) to a data processing center
with a total peak demand of 100 megawatts or greater,
construction related transaction taxes levied pursuant to
Chapter 23 of this title, or payments required to be made in
lieu thereof, on computers, servers, software licensed for use
at the data processing center, equipment supporting computing,
networking, or data storage, cooling systems, cooling towers,
and other temperature infrastructure, and any other equipment
necessary for the maintenance and operation of a data
processing center, shall be eligible for abatement throughout
the applicable maximum exemption period as provided in (c)
(1).
b. Except for those provided in (2) a., effective for
an abatement granted: (i) on or after January 1, 2027; and
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an abatement granted: (i) on or after January 1, 2027; and
(ii) to a data processing center with a total peak demand of
100 megawatts or greater, no abatement of state construction
related transaction taxes levied pursuant to Chapter 23 of
this title, or payments required to be made in lieu thereof,
shall extend beyond the date the private use industrial
property is placed in service.
(3) Notwithstanding subdivision (c)(2), the Governor
may abate the state construction related transaction taxes for
the maximum exemption period for a data processing center with
a total peak demand of 100 megawatts or greater, if the data
processing center is located in a "targeted county" as defined
in Section 40-18-376.1.
(d) Mortgage and recording taxes with respect to
mortgages, deeds, and documents relating to issuing or
securing obligations and conveying title into or out of the
public authority or county or municipal government with
respect to a private use industrial property may be abated by
complying with the procedures set forth in this chapter.
(e) An abatement under this section may be granted only
with respect to private use industrial property that has not
previously been placed in service by the private user who is
applying for the abatement or by a person who is a related
party, as defined in 26 U.S.C. §267, with respect to such
private user.
(f)(1) For a qualifying industrial or research
enterprise described in Section 40-9B-3(a)(10)e., which is
owned by a utility described in Section 37-4-1(7)a., and which
is a coal gasification or liquefaction project or an advanced
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is a coal gasification or liquefaction project or an advanced
fossil-based generation project, as such terms are defined in
Section 40-18-1, or which utilizes hydropower production, an
abatement under this section shall be in an amount equal to
100 percent of the state noneducational ad valorem taxes owed
for plant, property, and facilities for the maximum exemption
period, and in an amount equal to 50 percent of the state
construction related transaction taxes. The abatement shall
not be subject to the procedures in Section 40-9B-5 or
40-9B-6.
(2) For a qualifying industrial or research enterprise
described in Section 40-9B-3(a)(10)e., which is owned by a
utility described in Section 37-4-1(7)a., and which is a
project using an alternative energy resource the abatements
for which are not provided in subdivision (1), an abatement
under this section shall be in an amount equal to 100 percent
of the state noneducational ad valorem taxes owed for plant,
property, and facilities for the maximum exemption period, and
in an amount equal to 50 percent of the state construction
related transaction taxes. The abatement shall not be subject
to the procedures in Section 40-9B-5 or 40-9B-6.
(3) For a qualifying industrial or research enterprise
described in Section 40-9B-3(a)(10)e., which is owned by an
entity organized under Chapter 6 of Title 37, an abatement
under this section shall be in an amount equal to 100 percent
of the ad valorem taxes owed for plant, property, and
facilities for the maximum exemption period, and in an amount
equal to 100 percent of the construction related transaction
taxes. An abatement of ad valorem taxes levied or imposed by
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taxes. An abatement of ad valorem taxes levied or imposed by
counties or municipalities may be granted as provided in
subsection (h). An abatement of the construction related
transaction taxes imposed by the governing body of a county
pursuant to authority conferred under Article 1 of Chapter 12
of Title 40, or any general, special, or local act of the
Legislature, and such transaction taxes imposed by the
governing body of a municipality pursuant to authority
conferred under Article 3 of Chapter 51 of Title 11, or any
general, special, or local act of the Legislature, and all
transaction taxes imposed by any other local taxing
jurisdiction of Alabama may be granted as provided in
subsection (h). The abatement shall not be subject to the
procedures in Section 40-9B-5 or 40-9B-6.
(4) For a qualifying industrial or research enterprise
described in Section 40-9B-3(a)(10)e., which is owned by an
authority both organized and existing pursuant to Chapter 50A
of Title 11, and subject to the payments required to be made
in lieu of ad valorem, sales, use, license, and severance
taxes imposed by Section 11-50A-7, an abatement under this
section against the payments required to be made in lieu of
taxes imposed by Section 11-50A-7, shall be allowed in an
amount equal to 100 percent of the payments required to be
made in lieu of ad valorem taxes owed for plant, property, and
facilities for the maximum exemption period, and in an amount
equal to 100 percent of the payments required to be made in
lieu of the construction related transaction taxes, including,
without limitation, payments required to be made in lieu of
all transaction taxes imposed by the governing body of a
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all transaction taxes imposed by the governing body of a
county pursuant to authority conferred under Article 1 of
Chapter 12 of this title, or any general, special, or local
act of the Legislature, all transaction taxes imposed by the
governing body of a municipality pursuant to authority
conferred under Article 3 of Chapter 51 of Title 11, or any
general, special, or local act of the Legislature, and
payments required to be made in lieu of all transaction taxes
imposed by any other taxing jurisdiction of Alabama. The
abatement of such payments required to be made in lieu of
local taxes may be granted as provided in subsection (h). The
abatement shall not be subject to the procedures in Section
40-9B-5 or 40-9B-6.
(5) For a qualifying industrial or research enterprise
described in Section 40-9B-3(a)(10)e., which is owned by a
utility described in Section 37-4-1(7)a., the abatement for
state noneducational ad valorem taxes provided in subdivision
(1) or (2) of this subsection, shall be equal to 100 percent
of the state noneducational ad valorem taxes owed for plant,
property, and facilities for the maximum exemption period if
the industrial or research enterprise is located in either of
the following:
a. Any area designated or created as an enterprise zone
by law or that is governed by the Alabama Enterprise Zone Act.
b. 1. Any Alabama county which is considered to be less
developed. A county is considered to be less developed if it
has been found to be less developed by the Alabama Department
of Labor using the most current data available from the United
States Departments of Labor or Commerce, the United States
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States Departments of Labor or Commerce, the United States
Bureau of the Census, or any other federal or state agency,
and which finding shall be made not later than January 1 of
each year thereafter.
2. A county shall be found to be less developed if it
is ranked as the forty-fifth through sixty-seventh county,
inclusive, using the following factors:
(i) Percent change in population over the most recent
five-year period.
(ii) Personal per capita income in the last calendar
year for which data are available.
(iii) The average percent employed over the last 12
months for which data are available.
3. The factors used in ranking counties shall be
weighted in the following manner:
(i) Percent change in population (25 percent).
(ii) Personal per capita income (25 percent).
(iii) Average percent employed (50 percent).
(6) a. To the extent that a plant, property, or
facility described in Section 40-9B-3(a)(10)e., is owned in
whole or in part by one or more private users listed
hereinafter in subparagraph paragraph c., including, but not
limited to, ownership as tenants in common, joint tenants, or
owners of an undivided interest, then each private user shall
be entitled to the abatement allowed under this section with a
percentage limitation equal to the ownership interest
percentage of the private user multiplied by the percentage
limitation found in this subsection applicable to the private
user for the tax, or payment in lieu of tax, in question.
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user for the tax, or payment in lieu of tax, in question.
b. To the extent that a plant, property, or facility
described in Section 40-9B-3(a)(10)e. is owned by a private
user which is itself owned in whole or in part by one or more
of the entities listed hereinafter in subparagraph paragraph
c., then the private user shall be entitled to the abatement
allowed under this section with a percentage limitation equal
to the sum, for all owners, of the ownership interest
percentage of each owner multiplied by the percentage
limitation found in this subsection applicable to the owner
for the tax, or payment in lieu of tax, in question.
c. The entities listed in this subparagraph paragraph c.
are:
1. A utility described in Section 37-4-1(7)a. ;
2. An entity organized under Chapter 6 of Title 37 .;
and
3. An authority both organized and existing pursuant to
Chapter 50A of Title 11 and subject to the payments required
to be made in lieu of ad valorem, sales, use, license, and
severance taxes imposed by Section 11-50A-7.
(7) No abatement for mortgage and recording taxes,
local noneducational ad valorem taxes, or local noneducational
construction related transaction taxes shall be granted to a
qualifying industrial or research enterprise described in
Section 40-9B-3(a)(10)e., owned by a utility described in
Section 37-4-1(7)a., except upon the approval of the abatement
by the governing body of the county or municipality as
provided in subsection (b) of Section 40-9B-5 (b).
(g) The abatements of ad valorem taxes and payments in
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(g) The abatements of ad valorem taxes and payments in
lieu thereof allowed by amendments to this section by Act
2008-275 shall become effective for projects for which
statements of intent are filed after December 31, 2011. No ad
valorem taxes, or payments in lieu thereof, shall be abated
for periods prior to January 1, 2012. The other abatements
allowed by amendments made to this section by Act 2008-275
shall become effective after December 31, 2011.
(h) For a qualifying industrial or research enterprise
described in Section 40-9B-3(a)(10)e., the approval of the
abatement of a specific ad valorem tax or construction related
tax levied or imposed by a county or municipality, or payments
required to be made in lieu thereof, shall take effect only
upon adoption of a resolution by the governing body of that
county or municipality approving such abatement or
abatements."
"§40-9B-4.1
In no event shall any incentive provided in Act
2012-210 be available to any company filing an application
after July 31, 20282032. Any project granted an incentive
prior to July 31, 20282032, shall be entitled to the incentive
pursuant to the project agreement regardless of whether Act
2012-210 is reauthorized."
"§40-23-35
(a) Such amount of money as shall be appropriated for
each fiscal year by the Legislature to the Department of
Revenue with which to pay the salaries, the cost of operation
and management of the department shall be deducted, as a first
charge thereon, from the taxes collected under the provisions
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charge thereon, from the taxes collected under the provisions
of this division; provided, that the expenditure of the sum so
appropriated shall be budgeted and allotted pursuant to
Article 4 of Chapter 4 of Title 41, and limited to the amount
appropriated to defray the expenses of operating the
department for each fiscal year. After the payment of the
expenses, so much of the amount remaining as may be necessary,
after first applying all sums of money received by reason of
the application of the surplus in the income tax as provided
by Section 40-18-58, for the replacement in the public school
fund of the three-mill constitutional levy for schools and in
the General Fund of the one-mill levy for soldiers' relief and
the two and one-half mills for general purposes lost by
exemption of homestead provided for in this division shall be
first charges against the proceeds of the licenses, taxes, or
receipts levied or collected under this division. The
Comptroller, with the approval of the Governor, is hereby
directed to draw his or her warrants payable out of the total
proceeds of the licenses, taxes, or receipts levied or
collected under this division as herein provided in such sum
as shall be found necessary to take care of and replace the
three-mill constitutional school levy, the one-mill soldiers'
relief levy, and the two and one-half mill levy for general
purposes of the state ad valorem taxes lost as above set
forth.
(b) Of the amounts of such collections in any fiscal
year remaining after the payment of the expenses of
administration and replacement of the amounts in the several
funds as herein provided there shall be paid into the Treasury
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funds as herein provided there shall be paid into the Treasury
sums to be credited as follows:
(1) To the credit of the 67 counties of the state, to
be divided and distributed as hereinafter provided, three
hundred seventy-eight thousand dollars ( $378,000 );
(2) To the Department of Human Resources, one million
three hundred twenty-two thousand dollars ( $1,322,000 ); and
(3) Beginning June 1, 2000, to the Department of
Conservation and Natural Resources for capital outlay for
acquisition of land contiguous to existing state parks and
land acquired for lakes and or water reservoirs, provision,
construction, improvement, renovation, equipping, and
maintenance of the state parks system only and not for use by
the Department of Conservation and Natural Resources for
personnel or administrative use, the sum equal to the increase
in receipts accruing to the State of Alabama due to the cap on
discounts per license holder in Section 40-23-36(b), which
increase shall be equal to the difference between the discount
rate or amount allowed under Section 40-23-36(b) and the
maximum discount rate allowable under Section 40-23-36(a);
provided, however, if at any time any bonds of the Alabama
State Parks System Improvement Corporation, or the Alabama
Public Historical Sites and Parks Improvement Corporation, are
outstanding (excluding bonds that have been refunded by the
establishment of an escrow trust for the payment thereof
consisting solely of bonds or other obligations which as to
principal and interest constitute direct obligations of, or
are unconditionally guaranteed by, the United States of
America) there shall first be paid into the State General Fund
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America) there shall first be paid into the State General Fund
from such collections an amount equal to the debt service
(principal, interest, and premium, if any) payable on such
bonds in the then current fiscal year of the state. Provided,
however, that one million dollars ($1,000,000) of such
increase in receipts per fiscal year shall be credited to the
Department of Human Resources beginning October 1, 1996, until
September 30, 2002, and shall be expended for the foster
children program.
(4)a. On October 1, 2002, to the Department of
Conservation and Natural Resources for capital outlay, repairs
and maintenance of the state parks system only, the minimum
sum of five million dollars ($5,000,000) from the increase in
receipts accruing to the State of Alabama due to the cap on
discounts per license holder in Section 40-23-36(b) as
calculated in Section 40-23-35(b)(3). Beginning October 1,
2003, through September 30, 2021, annually, to the Department
of Conservation and Natural Resources for capital outlay,
repairs, and maintenance of the state parks system only, the
sum calculated by a fraction, the numerator of which is five
million dollars ($5,000,000) and the denominator of which is
equal to the increase in receipts as calculated in Section
40-23-35(b)(3) for fiscal year 2002 accruing to the State of
Alabama multiplied by the increase in receipts as calculated
in Section 40-23-35(b)(3) for the then current fiscal year, or
the sum of five million dollars ($5,000,000), whichever is
greater. Notwithstanding the previous sentence, for the fiscal
years ending September 30, 2012, and September 30, 2013, only,
the five million dollars ($5,000,000) shall be transferred to
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the five million dollars ($5,000,000) shall be transferred to
the State General Fund.
b. Beginning October 1, 2021, annually, to the
Department of Conservation and Natural Resources for capital
outlay, repairs, and maintenance of the state parks system
only, seven million dollars ($7,000,000). Beginning with the
fiscal year that starts October 1, 2022, the State Treasurer
shall annually adjust the dollar amount in this paragraph to
reflect the cumulative change in the Consumer Price Index for
All Urban Consumers (CPI-U), as published by the Bureau of
Labor Statistics of the United States Department of Labor, or
a successor index, for the annual period ending on the
December 31 preceding the adjustment date and rounded to the
nearest one thousand dollars ($1,000).
c. Beginning October 1, 2002, to the credit of the
State General Fund, the balance of the sum equal to the
increase in receipts accruing to the State of Alabama due to
the cap on discounts per license holder in Section
40-23-36(b).
(c) One-half of the amount deposited to the credit of
the 67 counties as above provided, shall be divided and
distributed proportionately among the 67 counties of the state
according to the population of the counties as shown by the
last federal census as proclaimed, published, or certified by
the Director of the Bureau of the Census; and one-half of the
proceeds shall be divided or distributed equally among 67
counties; provided, that the funds divided and distributed to
the several counties of the state as hereinabove provided for
shall be used exclusively for full-time health service in
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shall be used exclusively for full-time health service in
cooperation with the State Board of Health or the federal
government, and for extension services in cooperation with the
Alabama Agriculture Extension Service or the federal
government, at the discretion of the county commissions of the
several counties of the state.
(d) The amounts provided in subsection (b) for the
Department of Human Resources shall be used for general
welfare purposes. For purposes of this division, "general
welfare purposes" means:
(1) The administration of public assistance as set out
in Sections 38-2-5 and 38-4-1;
(2) Services, including supplementation and
supplementary services under the federal Social Security Act,
to or on behalf of persons to whom such public assistance may
be given under Section 38-4-1;
(3) Services to and on behalf of dependent, neglected,
or delinquent children; and
(4) Investigative and referral services to and on
behalf of needy persons.
(e) In addition, there shall be paid, commencing on
January 1, 1978, and on the first day of each fiscal quarter
thereafter, to the Department of Human Resources for a
statewide, state-administered food stamp program, as
authorized by the Food Stamp Act of 1964, Public Law 88-525,
88th Congress, and amendments thereto, an amount equal to five
percent of the value of food stamp benefits issued statewide
in excess of the amount paid by recipients (bonus or free
stamps) during the immediate prior fiscal quarter, which sum
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stamps) during the immediate prior fiscal quarter, which sum
so appropriated shall be paid quarterly to the Department of
Human Resources Trust Fund for administration of the food
stamp program in conformity with rules and regulations
promulgated adopted by the United States Department of
Agriculture and in conformity with Sections 38-1-1 through
38-6-9. The administrative funds shall be limited to and based
on fiscal year 1976-77 administrative costs, normal
inflationary increases, and mandated administration
requirements of the Alabama Legislature and the United States
Department of Agriculture. The Department of Human Resources
will not staff any county food stamp office at a level that
exceeds the average staff-to-recipient ratios that existed in
Alabama during fiscal year 1976-77. This restriction will
apply in coordination with those provided hereinabove and,
should conflict occur, the lesser amount of expenditure shall
be required. At the end of each fiscal year, an accounting
shall be made of the sum so that any unexpended and
unencumbered balance of funds may be determined for the
purpose of paying such balance to the Education Trust Fund.
(f) The amount of the proceeds of all taxes levied by
this division remaining after the payment of the expenses of
administration and enforcement and the replacement in the
several funds of the amount lost by any homestead exemptions
and the distribution as provided in subsections (b) and (d),
shall be paid into the Education Trust Fund except as provided
in subdivision (4) of Section 40-23-2 (4) and subsection (c) of
Section 40-23-61 (c) and, beginning January 1, 2016 , except
those collected on consumable vapor products as defined in
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those collected on consumable vapor products as defined in
subdivision (15) of subsection (a) of Section 40-23-1 (a)(15) ,
and, beginning January 1, 2027, those collected on
construction related transaction taxes on building materials,
building fixtures, structural components, real property
improvements, power infrastructure for transformation,
distribution, or management of electricity, backup power
generation systems, and battery systems for data processing
centers under Section 40-9B-4(c)(2), which shall be
distributed to the State General Fund."
Section 2. Nothing in this act amending Sections
40-9B-3, 40-9B-4, and 40-9B-4.1 Code of Alabama 1975, shall
apply to any incentive that is part of a project executed
before the effective date of this act or expansions of that
project after the effective date of this act for a 10-year
period after the effective date of this act.
Section 3. This act shall become effective on June 1,
2026.
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HB399 Enrolled
Page 35
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 10-Mar-26, as amended.
John Treadwell
Clerk
Senate 09-Apr-26 Amended and Passed
House 09-Apr-26 Concurred in Senate
Amendment
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