Programs
Tax Credit Program
Eligibility
Forms
Round 1 opening date and deadline
Applications are currently closed. Approvals from the latest round are expected to be finalized on June 10, 2025 (notional) at the Innovate Alabama board meeting.
Round 2 opening date and Deadline
Opens: June 10, 2025 (notional)
Closes: August 1, 2025 (notional)
Approvals: September 16, 2025 Board Meeting (notional)
Questions
About
To create a flourishing ecosystem in Alabama where tech accelerators and businesses thrive, Innovate Alabama offers tax credits to qualifying economic development organizations (EDOs) to enable the EDOs to accomplish what they do best: provide the tools, resources, and opportunities that help entrepreneurs level up their companies.
The Innovating Alabama Act, found in Article 22, Chapter 10, Title 41, Code of Alabama (1975), creates an incentive mechanism to provide tax credits to EDOs for qualifying projects. establishes a tax credit program to support EDOs engaged in growing Alabama’s technology ecosystem. Under the Act, taxpayers can contribute funds to qualifying EDOs and receive a dollar-for-dollar state tax credit, offsetting up to 50% of their state tax liability. Unused credits may be carried forward for up to five years. The credit can be applied against the following state taxes:
- Income tax (individual and corporate)
- Financial institution excise tax
- Insurance premium tax
- Utility license tax
Apply
Step 1 – Apply for EDO Designation
An entity seeking to apply for tax credits must first be designated as a Local Economic Development Organization (LEDO) or a Statewide Economic Development Organization (SEDO) by Innovate Alabama. This is done by submitting a form to Innovate Alabama requesting to be designated as an Economic Development Organization (EDO), as those terms are defined in the Alabama Code.
EDO Eligibility
To qualify as an EDO, one must be:
- An Alabama entity operating as a non-profit.
- Charged with improving the state or a specific region within the state.
- Proven to have supported or participated in economic development efforts within Alabama.
To apply for EDO Designation, complete the online form below. If an applicant has previously received EDO Designation, the applicant may upload its most recent designation letter here to request re-approval of its EDO status. The online form below will also require copies of the following documents:
- W-9
- If an organization is exempt under I.R.C. § 501(c)(3), its IRS Determination Letter
APPLICATIONS OPEN JUNE 10, 2025 (NOTIONAL)
Step 2 – Submit a Project Application
Once the EDO Designation has been assigned, the EDO may submit an online application to Innovate Alabama to request a tax credit allocation. Tax credits can be used to support programs for either an “Innovative Company” or a “Tech Accelerator”. Applications will be open for online submission once the tax credit round begins.
Once EDO Designation has been assigned, the EDO may submit an online application to Innovate Alabama to request a tax credit allocation as either an Innovative Company or a Tech Accelerator for a qualifying project specified in the application.
Project Eligibility
The Tax Credit application is divided into two categories:
Tech Accelerators:
- To qualify as a Tech Accelerator, the qualifying project must be a for-profit startup business accelerator focused on commercializing research and technology, as well as business programs designed to support entrepreneurial ventures targeting underserved populations, such as minorities and rural communities.
- This includes advanced manufacturing, aerospace, agriculture, bioscience, biotechnology, electronics, energy and natural resources, engineering, life sciences, and information technology industries, and any other innovative industry as determined by Innovate Alabama in its sole discretion.
Innovative Company:
- To qualify as an Innovative Company, the organization must be a for-profit, headquartered in a New Markets Tax Credit eligible area, in an innovative industry, employs fewer than 15 people, and has earned under $1 million in average gross revenue over the past 3 years; OR
- Be A for-profit, headquartered In Alabama, in an innovate industry, employs fewer than 75 people and is at least 51% owned and controlled by women or African Americans who are U.S. citizens.
APPLICATIONS OPEN JUNE 10, 2025 (NOTIONAL)
A Tax Credit Application must include a letter of support from your donor(s). They can either use their own letter or the provided template.
All Tax Credit Applications must be notarized. You can download the Notary Public form here.
Step 3 – Application Approvals
Project approvals will be announced during a subsequent Innovate Alabama Board Meeting. Regardless of the outcome of the application, each applicant will receive an email following the meeting to confirm the status of their project application.
Step 4 – Reserve Tax Credits (Donors)
Tax credit reservations are processed through the Alabama Department of Revenue. For step by step instructions on how donors can claim their tax credits, visit www.revenue.alabama.gov.
Step 5 – EDO Reporting
All reports must be submitted through the provided links below.
For approvals in 2023 or 2024, follow dates in the existing funding agreement.
Beginning in 2025, reporting guidelines will follow the timeline below and will be reflected in your funding agreement.
a. Audited Financials and Program Reports: Due date of July 1.
b. Initial Report: An Initial Report is required even if there are no material updates to your program’s status.
- For applications approved at the 2nd quarter board meeting, reports shall be due by January 31.
- For applications approved at the 3rd quarter board meeting, reports shall be due by March 31.
c. Status Report: Due one (1) month after program completion.
d. Impact Report, Program Recruitment and Program Expenditures Report: Due one (1) month after project completion.
Innovate Alabama Tax Credit Recipients
Innovate Alabama Tax Credit recipients include the following EDOs. This list will continue to grow as Innovate Alabama approves additional recipients in future rounds.
Please direct questions on the Innovate Alabama Tax Credit Program to incentives@innovatealabama.org.
Frequently Asked Questions
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