HB109 - Alabama Research and Development Act

• Establishes the Alabama Research and Development Act allowing a tax credit equal to 10% of in-house and contract research expenses plus 25% of consortium research expenses conducted in Alabama, calculated against a rolling 3-year average baseline.

• Limits total research and development tax credits available statewide to $20 million annually for major research expenses (over $5 million) and $5 million annually for minor research expenses (under $5 million), with no single taxpayer receiving more than 20% of available credits in one tax year.

• Allows credits to offset state income taxes under Chapters 16 and 18, with unused credits carried forward up to 5 years; credits may not reduce estimated tax payments before January 1, 2021, and must be applied after all other state income tax credits.

• Permits taxpayers to transfer credits to other entities when all assets are transferred in the same transaction, requiring a $1,000 transfer fee per transferee and Department approval through executed transfer agreements.

• Takes effect January 1, 2021, and sunsets December 31, 2025, unless extended by the legislature; requires annual reporting by taxpayers claiming credits beginning January 1, 2022.