HB424 Summary: Alabama Innovation Act

• Establishes a research and development tax credit for Alabama companies conducting qualified research in approved industries, offering 10% credit for in-house and contract research expenses and 25% credit for consortium research expenses conducted in Alabama.

• Limits total annual credits to $25 million statewide with a $2,000,000 maximum per taxpayer per year, allocated on a first-come, first-served basis through applications submitted between March 15 and December 31.

• Allows credits to offset Alabama income tax (Chapter 16) or financial institution excise tax (Chapter 18), with unused credits carried forward for up to five years; credits cannot reduce estimated tax payments before January 1, 2020.

• Requires taxpayers to apply through the Department of Commerce, submit qualifying research documentation, and file annual informational reports starting January 1, 2021; all filings treated as tax returns subject to confidentiality provisions.

• Sunsets December 31, 2024 unless extended by the legislature; effective for tax years beginning January 1, 2020.