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HB641 INTRODUCED
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HB641
I3TL1WW-1
By Representatives Lands, Daniels
RFD: Ways and Means General Fund
First Read: 19-Mar-26
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I3TL1WW-1 03/19/2026 MR (F)DJ 2026-1373
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First Read: 19-Mar-26
SYNOPSIS:
Under existing law, certain tangible personal
property, up to a market value of $100,000, is exempt
from payment of the state-levied ad valorem tax.
This bill would exempt tangible personal
property with a market value over $120,000 of a
business with less than 50 employees from the
state-levied ad valorem tax.
This bill would allow local governments to adopt
companion exemptions.
This bill would also make nonsubstantive,
technical revisions to update the existing code
language to current style.
A BILL
TO BE ENTITLED
AN ACT
Relating to exemptions from taxation and licenses; to
amend Section 40-9-1, as last amended by Act 2025-344, 2025
Regular Session, Code of Alabama 1975; to exempt tangible
personal property with a market value over $120,000 of a
business with less than 50 employees from the state-levied ad
valorem tax, would allow local governments to adopt companion
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valorem tax, would allow local governments to adopt companion
exemptions; and to make nonsubstantive, technical revisions to
update the existing code language to current style.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Section 40-9-1, as last amended by Act
2025-344, 2025 Regular Session, Code of Alabama 1975, is
amended to read as follows:
"§40-9-1
The following property and persons shall be exempt from
ad valorem taxation and none other:
(1) All bonds of the United States and this state and
all county and municipal bonds issued by counties and
municipalities in this state ,; all property, real and
personal, of the United States and this state and of county
and municipal corporations in this state; all cemeteries ,; all
property, real and personal, used exclusively for religious
worship, for schools , or for purposes purely charitable ;,
provided , that property, real or personal, owned by any
educational, religious, or charitable institution, society , or
corporation let for rent or hire or for use for business
purposes shall not be exempt from taxation, notwithstanding
that the income from such property shall be used exclusively
for education, religious, or charitable purposes; all
mortgages, together with the notes, debts, and credits secured
thereby on real and personal property situated in this state,
which mortgages have been filed for record and the privilege
tax paid thereon; all security agreements and security
interests under the Uniform Commercial Code, together with the
notes, debts, and credits secured thereby; all money on
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notes, debts, and credits secured thereby; all money on
deposit in any bank or banking institution and all other
solvent credits; and all warrants issued by county boards of
education and city boards of education for the purpose of
erecting, repairing, or furnishing school buildings, or for
other school purposes.
(2) All property, real or personal, used exclusively
for hospital purposes, to the amount of seventy-five thousand
dollars ($75,000), where such hospitals maintain wards for
charity patients or give treatment to suchthese patients ;,
provided , that the treatment of charity patients constitutes
at least 15 percent of the business of suchthese hospitals ;,
provided further , that suchthe hospital need not be assessed
for taxation if the owner or manager shall file with the
county tax assessor wherein suchthe hospital is located within
the time allowed for assessing the property for taxation a
certificate that suchthe hospital has done 15 percent charity
work in the preceding tax year ; and, further provided , that
suchthe hospital , through its owner or manager , shall have
until the expiration of the preceding tax year to class its
work and ascertain whether or not suchthe hospital has done 15
percent of its treatment of patients as charity work.
(3) The shares of the capital stock of any corporation
owning and operating a hospital, to the extent of seventy-five
thousand dollars ($75,000) in value ;, provided , that the
corporation maintains wards for charity patients and gives
treatment to such patients, which treatment constitutes at
least 15 percent of the business of the hospital of the
corporation ;, provided , that the total exemption granted to
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corporation ;, provided , that the total exemption granted to
any such corporation shall not exceed seventy-five thousand
dollars ($75,000), taking into consideration its real and
personal property and the value of its shares of capital
stock.
(4) All property owned by the American Legion , or by
Veterans of Foreign Wars , or by the Disabled American
Veterans, or any post thereof ;, provided , that suchthe
property is used and occupied exclusively by the organization.
(5) All the property of literary and scientific
institutions and literary societies, when employed or used in
the regular business of the institutions.
(6) The libraries of ministers of the gospel, all
libraries other than those of a professional character , and
all religious books kept for sale by ministers of the gospel
and colporteurs.
(7) The property of individuals who are deaf, hard of
hearing, or insane to the extent of three thousand dollars
($3,000) and the property of blind individuals to the extent
of twelve thousand dollars ($12,000).
(8) All family portraits.
(9) All cotton, livestock, or agricultural products
that have been raised or grown in the State of Alabama and
remain in the hands of the producer thereof, or his or her
landlord, or in the hands of a cooperative association for all
time, and for a period of one year in the hands of the
purchaser or the manufacturer.
(10) All cotton, wherever grown, stored in licensed
warehouses in the State of Alabama for a period not exceeding
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warehouses in the State of Alabama for a period not exceeding
12 months.
(11) Provisions and supplies on hand for the current
year for the use of the family and the making of crops; all
wearing apparel; farming tools; tools and implements of
mechanics to the value of two hundred dollars ($200); all
livestock, including mules, studs, jacks and jennets, cattle,
horses, cows, calves, hogs, sheep, and goats; and household
and kitchen furniture ; and one sewing machine.
(12) No license or taxation of any character, except
franchise taxes provided by Section 229 of the Constitution of
Alabama of 2022, shall be collected or required to be paid to
the state or any county or municipality therein by any state
or county fair ,; agricultural association ,; or stock, kennel,
or poultry show. Athletic stadiums owned and controlled by
universities, schools, or colleges and which are used
exclusively for the purpose of promoting intercollegiate or
interschool interscholastic athletics ;, provided , that the
revenue received from athletic stadiums, when admission is
charged, shall be used for the benefit of athletic
associations of suchthese universities, colleges, or schools.
Nothing contained in this subdivision shall be construed to
prohibit any municipality, county, or state from imposing any
license tax upon or for the privilege of engaging in the
business of supplying services for hire or reward or selling
commodities other than livestock, farm products, or farm
implements or conducting or operating devices or games of
skill or amusements or other games or devices, or conducting
or operating shows, displays , or exhibits other than shows,
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or operating shows, displays , or exhibits other than shows,
displays , or exhibits of agricultural implements, farm
products, livestock, and athletic prowess.
(13) All material, including, without limitation, coke,
to be compounded or further manufactured, when stocked at any
plant or furnace for manufacturing purposes in Alabama.
(14) All articles manufactured in Alabama, including
pig iron, in the hands of the producer or manufacturer
thereof, for 12 months after its production or manufacture.
(15) All property, both real and personal, owned by any
unit or organization of the Alabama National Guard officially
recognized as such by the federal government and organized and
maintained by the state, and all property owned by shares and
used exclusively by and kept exclusively in the possession of
any such unit or organization of the Alabama National Guard,
the annual rent or hire of which is not in excess of the
annual state, county, and municipal taxes on the property
shall be exempt from taxation by the state, and the county and
municipality in which the same may be situated.
(16) All poultry.
(17) The property of all incompetent veterans to the
value of three thousand dollars ($3,000).
(18) The following items of personal property when
owned by individuals for personal use in the home or usually
kept at the home of the owner and not carried as stocks of
merchandise, namely : Libraries libraries ; phonographs; pianos
and other musical instruments; paintings; precious stones,
jewelry, plate silverware, ornaments, and articles of taste;
watches and clocks; wagons, buggies, bicycles, guns, pistols,
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watches and clocks; wagons, buggies, bicycles, guns, pistols,
canes, golf sticks, golf bags, and sporting goods; money
hoarded; radios; mechanical and electrical refrigerators; and
electrical appliances.
(19) All property owned by the Benevolent and
Protective Order of Elks, Fraternal Order of Police, Fraternal
Order of Eagles, or Loyal Order of Moose, or lodge thereof ;,
provided , that suchthe property is used and occupied
exclusively by such organization.
(20) All devices, facilities, or structures, and all
identifiable components thereof or materials for use therein,
acquired or constructed primarily for the control, reduction,
or elimination of air or water pollution.
(21) Tobacco leaf stored in hogsheads.
(22) All farm tractors, as that term is defined in
Section 32-1-1.1 ;, and all farming implements, as that term is
used in Section 40-11-1(b)(5), when used exclusively in
connection with agricultural property as defined in Section
40-8-1(b)(1).
(23) All grain bins used exclusively for the purpose of
storing, holding, drying, preserving, or otherwise preparing a
grain, as defined in Section 2-31-1, for market. For purposes
of this chapter, "grain bin" means a structure and its
component parts.
(24) All stocks of goods, wares, and merchandise
described in Section 40-11-1(b)(4).
(25) All aircraft, replacement parts, components,
systems, supplies, and sundries affixed or used on the
aircraft, and ground support equipment and vehicles used by or
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aircraft, and ground support equipment and vehicles used by or
for the aircraft, when used by a certificated or licensed air
carrier with a hub operation within this state, for use in
conducting intrastate, interstate, or foreign commerce for
transporting people or property by air. For the purpose of
this subdivision, the words "hub operation" within this state
shall be construed to have all of the following criteria:
a. There originates from the location 15 or more flight
departures and five or more different first-stop destinations
five days per week for six or more months during the calendar
year.
b. Passengers or property or both are regularly
exchanged at the location between flights of the same or a
different certificated or licensed air carrier.
(26) All property described in 12 U.S.C. § 1701q,
commonly known as HUD 202 property, is hereby exempt from any
and all ad valorem taxes.
(27) All vessels and equipment thereon, used
predominantly in the business of commercial fishing, as
defined in Section 40-23-1, by the owners thereof.
(28)a. The tangible personal property owned by a
business and reported in accordance with Article 1 of Chapter
7 to the extent of one hundred thousand dollars ($100,000) in
market value is exempt from the state - levied ad valorem tax.
b. Any county or municipality, by resolution or
ordinance, may adopt the exemption provided in paragraph a.
for county or municipal ad valorem taxes levied on tangible
personal property. The ordinance or resolution must be adopted
at least 90 days prior to October 1 of the electing year.
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at least 90 days prior to October 1 of the electing year.
(29)a. The tangible personal property owned by a
business with 50 or more employees and reported in accordance
with Article 1 of Chapter 7 to the extent of one hundred
twenty thousand dollars ($120,000) in market value is exempt
from the state-levied ad valorem tax.
b. Any county or municipality, by resolution or
ordinance, may adopt the exemption provided in paragraph a.
for county or municipal ad valorem taxes levied on tangible
personal property. The ordinance or resolution must be adopted
at least 90 days prior to October 1 of the electing year. "
Section 2. This act shall become effective on October
1, 2026.
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