The Gadsden-Etowah
County Industrial Development Authority will help you obtain all
the incentives for which your project qualifies. It is essential
for state notification requirements to be fulfilled and for all approvals
to be in place before any project costs are incurred. We will assist
in preparing the applications and we will carry them through the
approval process. State and local governments have a pro-business
attitude, and have quickly approved 100% of the incentive applications
submitted by the IDA for new and expanding companies.
Income Tax Capital Credit
A credit of 5% of the capital costs of an eligible project can be applied
against the Alabama income tax liability generated by the project’s
income, each year for 20 years. These credits cannot be carried forward
or back, or be used to obtain a refund. The credits follow the income
generated by the project and they pass through such entities as S corporations,
partnerships and limited liability companies.
To qualify, a project must
meet four criteria:
(1) It must be an industrial,
warehousing, research or headquarters facility.
(2) The capital cost must
be at least $2,000,000 for new, expansion, and headquarters facility
projects; $1,000,000 for small business addition projects; or $500,000
for projects in an enterprise zone (most industrial sites in Etowah
County are in a zone).
(3) At least 20 new jobs
must be created at new, expansion, or headquarters facility projects;
or 15 new jobs at small business addition projects; or 5 new jobs
at projects in an enterprise zone.
(4) Companies must pay an
average hourly wage of at least $8.00 per hour, or an average total
compensation of at least $10.00 per hour including fringe benefits.
For complete details, click www.ador.state.al.us/Taxincentives/capcrsummary.htm.
Also, investments in pollution control equipment are deductible in
computing Alabama income, as are apportioned amounts of federal income
taxes paid or accrued.
Business Privilege Tax Credits
Under Section 5 of the Alabama Enterprise Zone Act, an employer locating
a new plant or expanding an existing one in a zone can obtain tax credits
of up to $2,500 per new permanent employee hired, in any combination
of the following three ways:
(1) If an employer can certify
that at least 30% of new permanent employees hired pursuant to the
act were formerly unemployed for at least 90 days prior to this employment,
then the employer may receive the following credits on taxes due
from zone operation: 80% in the first year of operation, 60% in the
second year, 40% in the third year, and 20% in the fourth and fifth
years.
(2) If at least five new
permanent employees are hired, then employers may receive the following
tax credits for new investments or improvements to existing facilities:
10% on the first $10,000 invested, 5% on the next $90,000 invested,
and 2% on the remaining investment.
(3) For expenses of training
employees in new skills, employers may receive a tax credit of $1,000
per new permanent employee.
More information is here: www.ador.state.al.us/Taxincentives/buspriv.html.
Also, investments in pollution control equipment are deductible in
computing Business Privilege Tax liability.
Property Tax Exemptions
New industrial, warehousing or research enterprises may obtain non-educational
property tax exemptions for 10 years. Expanding companies may obtain
the same exemptions if the new capital investment amounts to 30% of
the original cost of the currently existing industrial property, or
$2 million, whichever is less.
In the City of Gadsden,
the combined state, county and city tax rate is 49 mills on 20% of
assessed value, of which 25 mills are for schools. For example, real
property taxes on land and a building valued at $1 million would
be computed as follows:
$1,000,000
x .20 x .049 = $9,800 per year, before exemptions
$1,000,000 x .20 x .024 = $4,800 per year, exempted for 10 years
$1,000,000 x .20 x .025 = $5,000 per year in school assessments to
be paid
Personal property
taxes on machinery and equipment are computed with the same tax rates
but use a composite factor (which varies by the kind of equipment) to
account for depreciation. A sample computation on a hypothetical investment
of $1 million follows. A total of 24 mills is exemptible and 25 mills
in school assessments are non-exemptible, so $1,000,000 x .20 x mills
x composite factor = amount per year:
| Year |
Composite
Factor |
Amount
Exempted |
School
Assessment |
| 1 |
.96 |
4,608 |
4,800 |
| 2 |
.94 |
4,512 |
4,700 |
| 3 |
.93 |
4,464 |
4,650 |
| 4 |
.86 |
4,128 |
4,300 |
| 5 |
.76 |
3,648 |
3,800 |
| 6 |
.66 |
3,168 |
3,300 |
| 7 |
.57 |
2,736 |
2,850 |
| 8 |
.46 |
2,208 |
2,300 |
| 9 |
.35 |
1,680 |
1,750 |
| 10 |
.29 |
1,392 |
1,450 |
| Total |
|
$32,544 |
$33,900 |
Sales & Use Tax Exemptions
New and expanding industrial, warehousing or research enterprises may
obtain non-educational sales tax exemptions on the purchase of construction
materials, furnishings and fixtures. They can also obtain use tax exemptions
on the purchase of machinery and equipment. The same capital investment
thresholds apply as for property tax exemptions.
In the City of Gadsden, the combined state, county and city sales tax
rate is 9%; of that, 0.5% is earmarked for schools. Assuming a purchase
of $1 million in construction materials:
$1,000,000
x 9.0% = $90,000 before exemption
$1,000,000 x 8.5% = $85,000 exempted
$1,000,000 x 0.5% = $ 5,000 school assessment to be paid |
In
the City of Gadsden, the combined state, county and city use tax rate
is 3.25%; of that, 0.125% is earmarked for schools. Assuming a purchase
of $1 million in machinery and equipment:
$1,000,000
x 3.250% = $32,500 before exemption
$1,000,000 x 3.125% = $31,250 exempted
$1,000,000 x 0.125% = $ 1,250 school assessment to be paid |
No
Inventory Taxes
There are no state, county or city inventory taxes on raw materials,
component parts, work in process, finished goods or goods in transit.
Utility
Gross Receipts Tax Exclusions
Certain types of manufacturing and compounding processes are excluded
from the state gross receipts tax on utility services. For example,
water used in manufacturing, in which 50% or more is used in processing,
is excluded from the gross receipts tax. Electricity used for electrolytic
or electrothermic processes is excluded from the tax. Also excluded
is natural gas when it becomes a component of tangible personal property
(but not as fuel) and gas used to chemically convert raw materials
for electrolytic or electrothermic processing.
Business License Fee Credits
Companies locating within an enterprise zone may receive credits against
payment of City of Gadsden business license fees, amounting to 80%
in the first year of operation, 60% in the second year, 40% in the
third year, and 20% in the fourth and fifth years.
Building Permit Fee Reduction
Companies building a new plant or expanding an existing one within
an enterprise zone may receive a 50% reduction in the City of Gadsden’s
building permit fee.
Site Preparation Grant
State grants can be made to counties, municipalities, industrial development
boards, airport authorities, port authorities, public corporations
or political subdivisions holding title to the sites that qualifying
projects will occupy.
To qualify, a project must be an industrial, warehousing, research
or headquarters facility as defined in the Standard Industrial Code.
In general, funds can be used to pay for surveying, clearing, excavating,
grading and providing drainage. Grant amounts, based on the following
capital investment ranges, are shown below:
| Capital
Investment |
Grant
Amount |
| Less
than $200,000 |
5.0% |
| $200,000
- 499,999 |
3.5% (minimum
$10,000) |
| $500,000
- 999,999 |
2.5% (minimum
$20,000) |
| $1,000,000
- 1,999,999 |
1.5% (minimum
$28,000) |
| $2,000,000
- 9,999,999 |
1.0% (minimum
$32,000) |
| $10,000,000
- 24,999,999 |
0.75% (minimum
$100,000, maximum $150,000) |
| $25,000,000 or greater |
$150,000 |
Free
Employee Training
The Alabama Industrial Development Training Institute, in conjunction
with Gadsden State Community College and the Bevill Manufacturing Technology
Center, conducts pre-employment training programs for companies to ensure
they have a suitable workforce in place when needed.
AIDT assumes all reasonable costs of program development, instructors,
equipment, consumable supplies, and training aids such as manuals, workbooks,
videotapes and films. More information is in the Technical Training section
of this website; click AIDT to
open it in a separate window.
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