HDR business

Incentives

Tax incentives are available for new and expanding companies in the City of Madison, Alabama. A summary of those incentives can be found below. Additional information can be found on the Alabama Department of Revenue website or on the Alabama Department of Commerce website.

In addition to state level tax incentives, incentives at the local level may be available. For help determining tax rates and finding available incentives, contact the City of Madison IDB at 256-772-2885.

Corporate Income Taxes

  • Corporate income tax rate is 6.5%
  • Based on the net taxable income of business done in Alabama
  • Businesses are permitted to deduct all of their federal taxes apportioned to Alabama

Potential incentives include:

  • Net-operating loss carry forward
  • Pollution-control equipment deduction
  • Income tax capital credit (see below)
  • Basic skills educational tax credit

Capital Credit

  • Available to qualifying all new and expanding companies and industries
  • Gives businesses up to 5% credit of capital costs
  • Can be applied to the Alabama income liability generated by the project income
  • Available annually for a maximum of 20 years

For more information, see the Capital Credit Information section on the Alabama Department of Revenue website.

Business Privilege Tax

  • Based on a company's net worth in Alabama and the company's ability to pay
  • Rate ranges from $.25 to $1.75 for each $1,000 of net worth in Alabama

Available incentives include:

  • Pollution-control equipment deduction
  • Air carrier with hub operations deduction

Property Tax

Alabama state property tax rate is 6.5mills (.0065%). County and city rates vary and current rate information can be found in the Property Tax Section of the Alabama Department of Revenue website.

Possible incentives include:

  • Abatements for non-educational property taxes
  • Pollution-control equipment exemptions
  • No property taxes on inventory
  • Raw materials inventory exemptions

Sales and Use Tax

The state sales and use tax rates are 2.5%. County rates vary and current rate information can be found in the City and County Tax Rates Section of the Alabama Department of Revenue website.

Available incentives include:

  • Abatement of state and non-educational local construction-related taxes
  • Raw materials, pollution control equipment, quality control testing, and donations to charitable entities exemptions
  • Utility gross receipts tax exclusions
  • Discount if sales tax is paid promptly

State Unemployment Tax

  • Employer requirement for the state unemployment tax is based on the first $8,000 of each employee's compensation
  • Rates vary from 0.5% to 5.4%
  • New employer rate is 2.7%
  • Rates are based on employer's experience rating
  • Employees do not contribute

Foreign Trade Zones

Madison County has a designated foreign trade zone that was developed for an existing industry and granted by the Huntsville-Madison County Airport Authority. Learn more about foreign trade zones by viewing the Foreign Trade Zones brochure (PDF) on the Economic Development Partnership of Alabama website.