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SB111
SLZL688-1
By Senator Elliott
RFD: Finance and Taxation Education
First Read: 13-Jan-26
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SLZL688-1 12/11/2025 JF (F)JF 2025-3437
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First Read: 13-Jan-26
SYNOPSIS:
This bill would establish an investment program
to provide financial support for trade programs in the
State of Alabama.
This bill would incentivize donations to local
foundations that support the development of career
technical education by creating a tax credit for
individuals and entities to offset their state income,
excise, premium, and utility tax liability. Qualifying
entities would use these donations to pay for the
construction and development of trade programs for
local industry. These funds may be used for
construction of facilities, including expenditures to
maintain or upgrade facilities.
This bill would also establish a board within
the Alabama Department of Workforce to determine the
eligibility of qualifying entities to receive donations
that qualify for the tax credit and to operate the
program with the support of the Department of Revenue.
A BILL
TO BE ENTITLED
AN ACT
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Relating to trade programs and trade schools; to
provide for funding of local trade schools and programs by
creating the Prepare Alabama Investment Program; to establish
the Prepare Alabama Investment Program Board to administer the
program ; to provide for state income, excise, premium, and
utility tax credits in exchange for donations to entities that
support the development of construction of facilities for
trade programs; and to provide for coordination with the
Department of Revenue.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. This act shall be known and may be cited as
the Prepare Alabama Act.
Section 2. For the purposes of this act, the following
terms have the following meanings:
(1) BOARD. The Prepare Alabama Investment Program
Board.
(2) COMMUNITY DEVELOPMENT FOUNDATION. A not for profit
community organization which provides or develops and oversees
workforce training in the surrounding community.
(3) DEPARTMENT. The Alabama Department of Workforce.
(4) ELIGIBLE ENTITY. A public or private trade school
or trade program, or a community development foundation that
meets the requirements provided in Section 4.
(5) ELIGIBLE TAXES. Financial institution excise tax,
income tax, insurance premium tax, and utility tax.
(6) FINANCIAL INSTITUTION EXCISE TAX. The taxes levied
and collected pursuant to Chapter 16 of Title 40, Code of
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and collected pursuant to Chapter 16 of Title 40, Code of
Alabama 1975.
(7) INCOME TAX. The taxes levied and collected pursuant
to Chapter 18 of Title 40, Code of Alabama 1975.
(8) INSURANCE PREMIUM TAX. The taxes levied and
collected pursuant to Chapter 4A of Title 27, Code of Alabama
1975.
(9) PROGRAM. The Prepare Alabama Investment Program.
(10) QUALIFIED DONATION. An unrestricted transfer of
funds from a qualified donor to an eligible entity.
(11) QUALIFIED DONOR. Any person who makes a qualified
donation to an eligible entity.
(12) TRADE SCHOOL. A public or private educational
institution or entity that is approved by a state agency or
subdivision of the state or accredited by a state-recognized
or nationally recognized accrediting body to provide
technical, trade, or vocational training.
(13) TAX YEAR. The calendar year for which annual
income is reported to the State of Alabama by a person that
makes a qualified donation.
(14) UTILITY TAX. The taxes levied and collected
pursuant to Sections 40-21-82 through 40-21-107, Code of
Alabama 1975.
Section 3. (a) The Prepare Alabama Investment Program
Board is established within the department to oversee the
development and operation of the Prepare Alabama Investment
Program. The board shall consist of the following members:
(1) The Governor, or his or her designee.
(2) The Secretary of the Alabama Department of
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(2) The Secretary of the Alabama Department of
Workforce, or his or her designee.
(3) The Commissioner of Revenue, or his or her
designee.
(4) The President Pro Tempore of the Senate, or his or
her designee.
(5) The Speaker of the House of Representatives, or his
or her designee.
(6) Two representatives of the Economic Development
Partnership of Alabama (EDPA), appointed by the organization.
(b) Members shall be appointed within 30 days of the
effective date of this act.
(c)(1) The EDPA shall appoint one initial member to the
board for a term of two years and one initial member to the
board for a term of four years.
(2) A member subsequently appointed to the board by the
EDPA s hall serve for a term of four years.
(3) A vacancy on the board of a representative of the
EDPA shall be filled by the EDPA before the next scheduled
meeting of the board, and the appointee shall serve for the
remainder of the unexpired term.
(d) Designees or appointees to the board shall be
inclusive and reflect the racial, gender, geographic, urban,
rural, and economic diversity of the state.
(e)(1) No later than three months after the effective
date of this act, the Governor, or his or her designee, shall
call the first meeting of the board, at which the members
shall elect a chair.
(2) The board shall meet at least once a year in
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(2) The board shall meet at least once a year in
Montgomery, Alabama, but thereafter shall meet as necessary to
conduct its business.
(3) A quorum for a meeting of the board shall be four
members.
(4) The board may meet by electronic means, so long as
there is a quorum of participating members.
(5) The legislative members of the board shall be
entitled to their legislative compensation, per diem, and
travel expenses for each day they attend a meeting of the
board pursuant to Section 49 of the Constitution of Alabama of
2022.
(6) The nonlegislative members of the board shall serve
without compensation but may be reimbursed for necessary
expenses in attending meetings of the board pursuant to the
policies of his or her respective appointing authority.
Section 4. To receive qualified donations as an
eligible entity under the program, the entity shall meet all
of the following requirements:
(1) Be a public or private trade school or trade
program recognized and approved by the department, or be a
community development foundation.
(2) Provide instructional services in trades designated
by the department without discrimination.
(3) Be in compliance with all reports and audits
required by law.
(4) Submit to the board a written five-year plan that
describes the financial viability and stability of the entity,
with a plan detailing how it would use qualified donations
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with a plan detailing how it would use qualified donations
under the program and update the written plan five years after
the initial plan is submitted and every five years thereafter.
Section 5. The board shall do all of the following:
(1) By November 1 of each year, determine if an
organization, school, or foundation is an eligible entity
pursuant to Section 4.
(2) By December 1 of each year, submit the list of
eligible entities to the Department of Revenue.
(3) By December 31 of each year, publish a list of
entities eligible to receive qualified donations during the
next tax year on its website or on the department's website.
Section 6. (a) An eligible entity shall only use
qualified donations for the purpose of providing workforce
focused instruction to the residents of the area that it
serves, which may include operational expenditures and
expenditures for maintenance, capital upgrades, and
improvements.
(b) An eligible entity may retain a person to solicit
or manage the qualified donations it receives for a percentage
fee of the qualified donations solicited or managed, but total
fees may not exceed three percent of the total amount of
qualified donations received during a calendar year.
(c) By March 1 of each year, an eligible entity shall
file a report with the board, on a form to be developed by the
board that shall include all of the following information:
(1) A schedule of each qualifying donation received
during the preceding tax year, which includes the amount,
identifies the qualified donor, and describes how the
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identifies the qualified donor, and describes how the
qualified donation was or is planned to be spent.
(2) A schedule of payments made to any person during
the preceding tax year for the purpose of soliciting or
managing the qualified donations received.
(d) An eligible entity shall report all donations
received from a taxpayer to the department within 30 days of
the receipt of that donation.
Section 7. Annually, the board and the department shall
jointly prepare a report that, at a minimum, includes all
qualified donations reported by eligible entities and all tax
credits claimed and approved pursuant to this act for the
preceding tax year. This report shall be provided to the
Legislature by the fifth day of the next regular session.
Section 8. (a) A taxpayer may claim a tax credit to
offset eligible taxes for each qualified donation as provided
in this section. The tax credit shall be provided as follows:
(1) For a qualified donor who is a single individual, a
head of household, or married, filing a separate return, an
amount equal to 100 percent of the qualified donations to the
taxpayer made during the tax year for which the credit is
claimed, not to exceed fifteen thousand dollars ($15,000).
(2) For a qualified donor who is married, filing a
joint return, 100 percent of the qualified donations to the
taxpayer made during the tax year for which the credit is
claimed, not to exceed thirty thousand dollars ($30,000).
(3)a. For a qualified donor that is taxed as a
pass-through entity under subchapters S or K of the Internal
Revenue Code, a limited liability company, or a professional
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Revenue Code, a limited liability company, or a professional
corporation, 100 percent of the qualified donations to the
taxpayer made during the tax year for which the credit is
claimed, not to exceed four hundred fifty thousand dollars
($450,000).
b. The tax credit shall be taken by the taxpayer on a
pro rata basis according to an individual's percentage of
ownership in the entity or fifteen thousand dollars ($15,000),
whichever is less. In the case of a qualified donor that is
taxed as a corporation under the Internal Revenue Code, an
amount equal to 100 percent or 75 percent of the corporation's
income, excise, utility, or insurance premium tax, not to
exceed the amount of the corporation's income, excise,
utility, or insurance premium tax liability, whichever is
less, with a contribution limit each tax year of five hundred
thousand dollars ($500,000).
(b)(1) The total amount of the tax credit for a tax
year may not exceed the taxpayer's tax liability or, for
financial institutions, the state portion of the taxpayer's
financial institution excise tax liability.
(2) Any unused tax credit may be carried forward for up
to three years following the qualified donations but shall not
be transferable.
(c)(1) The tax credits may be claimed beginning January
1, 2027, for the 2027 tax year.
(2) Except as provided in subdivision (b)(2), no tax
credit may be claimed after tax year 2031.
(d)(1) The statewide annual aggregate of the tax credit
allowed for qualified donations shall not exceed twenty-five
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allowed for qualified donations shall not exceed twenty-five
million dollars ($25,000,000).
(2) The department shall preapprove each qualified
donation for compliance with the applicable limit in this
subsection.
Section 9. (a) The department and the Department of
Revenue shall adopt rules by January 1, 2027, as necessary to
implement this act. The rules shall provide for all of the
following:
(1) That the tax credits will not reduce the
distribution to the Alabama Special Mental Health Trust Fund.
(2) That the tax credits shall be awarded based on the
order in which the credits are requested.
(b) The Department of Revenue shall prescribe the
method by which the tax credits are to be issued to eligible
taxpayers.
Section 10. (a) The department shall adopt rules to
implement the responsibilities of the board and this act.
(b) The board may retain an Alabama company to
publicize the program, including the development of
promotional and informational literature and a program website
for use by eligible entities and qualified donors.
Section 11. The tax credits created by this act may
also qualify for federal income tax credits or deductions, but
it is not intended for any qualified donation under this act
to automatically qualify for any federal income tax credit or
deduction.
Section 12. This act shall become effective on October
1, 2026.
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