Enterprise Zone Credit/Exemption

Within Montgomery’s enterprise zone, an enterprise zone credit (Section 5) or exemption (Section 11) for income tax is available for qualified participants. The program is administered by the Alabama Department of Economic and Community Affairs (ADECA).  ADECA will determine whether the project meets the requirements for the program and must certify that to the Alabama Department of Revenue.

Enterprise Zone Credit

Section 5 allows for a maximum credit of $2,500 per permanent new employee, to be applied against the income tax and/or business privilege tax liability of the company, provided specific requirements have been met. The credit can be used in the year earned and can be forwarded up to two consecutive years from the year earned.

Enterprise Zone Exemption

Section 11 is subject to approval by the enterprise zone advisory council and the governor of Alabama. Section 11 provides exemptions from sales and use tax (on purchases of construction related materials, machinery and equipment used in the zone), income tax, and/or business privilege tax at the enterprise zone for five years, provided employee requirements, specific to depressed areas, are met. The company can choose to exempt 100% of the income tax, business privilege tax, or sales and use tax at the enterprise zone and 50% of the company’s choice of the two remaining taxes.