AL SB122

Establishes a research and development tax credit program for qualified research expenses beginning January 1, 2015, with a 15% credit rate up to $2.5 million in expenses and 15% on amounts exceeding $2.5 million (capped at $600,000 plus 15% of excess).

Provides an additional 25% tax credit for basic research payments made to Alabama public universities, university research foundations, Hudson Alpha Institute, or Southern Research Institute, incentivizing university-based research.

Caps aggregate statewide credits at $2.5 million (2015-2016), $3.5 million (2017-2018), and $5 million (2019 and thereafter), with credits awarded on a first-come, first-served basis by the Department of Revenue.

Allows small businesses with fewer than 150 employees to receive refunds equal to 75% of excess credits (instead of carrying forward), subject to separate refund caps of $1 million (2015-2016), $1.5 million (2017-2018), and $2 million (2019 and thereafter).

Permits unused credits to be carried forward up to five consecutive tax years and converts pre-2015 qualified research expenses carried forward at a 20% conversion rate.