HB304 - Alabama Innovation Act Summary

• Establishes the Alabama Innovation Act to provide research and development tax credits for qualified research expenses conducted in Alabama by eligible companies and Alabama research entities.

• Tax credits are calculated at 25 percent of new consortium research expenses and 5 percent of in-house and contract research expenses, with credits offsetting income tax (Chapter 16) or financial institution excise tax (Chapter 18).

• Limits total annual tax credits to $10 million statewide with a $2 million maximum per taxpayer per year, allocated on a first-come, first-served basis with applications submitted electronically between March 15 and December 31.

• Allows unused tax credits to carry forward for 5 years and permits transfer of credits to other taxpayers under economic development project agreements, with restrictions on subsequent transfers and fraud protections.

• Credits apply only to research conducted in specified industries per NAICS codes and exclude farming, retail sales, and certain other activities; requires strict compliance and treats all filings as tax returns subject to penalties.