Alabama Tax Credits For Businesses
When you want to understand Alabama tax credits for businesses
, you have to gain a basic understanding of what tax credits really are. Tax credits are not to be confused with tax deductions. Tax deductions will lower the gross income of any business, but a tax credit is something that is granted by the government that will help lower what you owe in taxes. These credits are usually given to either individuals or entities.In terms of Alabama tax credits for businesses, many of them are usually non-refundable. The government offers these credits to businesses that make investments in certain ventures, property or even research. These credits, although non-refundable are usually carried over to the next year for many companies which they can apply to next years taxes. This means that next year, upon calculating tax deductions from their gross income, they can subtract the tax credits after applying the taxes owed by a company to a corresponding tax table. This means less taxes paid by the company, which is a good thing!
Since the current taxation rate in Alabama is roughly 6.5 percent, expanding and new companies in Alabama are offered special tax credits through their Capital Investment Tax Credit program which offers tax credits on income reaching 5 percent of a qualifying projects initial capital costs, which basically last for twenty years. Alabama tax credits for businesses may apply to a whole list of companies in the Alabama area that range from treatment facilities that do recycling activities to new companies that create new jobs in an area.
Overall, Alabama tax credits for businesses are awarded to those companies that are innovative, increase employment, and generally do positive things that will help a community and its surrounding environment. The more that businesses are conscious of doing things in an area that give value added, the more tax credits they will get that they can apply during tax season.
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