Under the Innovating Alabama Act, Innovate Alabama offers tax credits to qualifying economic development organizations (EDOs) that support innovative companies and tech accelerators across Alabama. The purpose of the program is to create an environment where tech accelerators and businesses thrive.
To view a list of Innovate Alabama Tax Credit recipients, click here.
Economic development organizations (EDOs) follow a two-step process to receive Innovate Alabama Tax Credits.
Apply for EDO designation
Submit a project
Once granted, EDO designation remains active for three years, providing the organization remains in good standing and continues to meet eligibility requirements. This determination does not guarantee or qualify for funding allocation. Please defer your application for EDO designation until you are prepared to submit a project for tax credits.
Note: An EDO that receives tax credits is required to complete a sequence of reports that will be outlined in the funding agreement.
Taxpayers who donate to an approved EDO project may receive an Alabama tax credit worth up to 50% of their state tax liability. The credit may be applied against the following state taxes:
Income tax (individual and corporate)
Financial institution excise tax
Insurance premium tax
Utility license tax
Any unused credit can be carried forward for up to five years.
For more information, follow the link below and click the eligible donor link.
There is one application cycle remaining in 2026. The following dates are subject to change.
New EDO Designation Application Period: May 5 – June 2, 2026
New EDO Designation Approvals: June 12, 2026
Project Application Period: June 15 – July 15, 2026
Project Application Approvals: August 6, 2026
Step 1 – Apply for EDO Designation
Organizations seeking tax credits must first receive EDO designation from Innovate Alabama.
If you are not prepared to submit a project application for tax credits within 12 months, please defer your application for EDO designation until you are ready to apply for tax credits.
For eligibility criteria and an application checklist, refer to the Innovate Alabama Tax Credit Application Guide.
Step 2 – Submit a Project Application
Once your EDO designation has been approved, you must apply for an eligible project during a project application cycle to receive tax credits: either as an innovative company or a tech accelerator.
How does an organization receive Innovate Alabama Tax Credits?
An organization may receive Innovate Alabama Tax Credits by completing the two-step application process which includes (1) EDO designation and (2) project application.
How will I know if my application has been approved?
Once a project application period has closed, approvals are announced at a subsequent Innovate Alabama Board meeting. After the meeting, each applicant will receive an email confirming whether the project was approved.
What is an EDO?
EDO stands for “economic development organization.” An EDO is an Alabama nonprofit entity that is charged with improving a region of the state or the state as a whole and has a track record of supporting economic development in Alabama.
What types of projects qualify for the Innovate Alabama Tax Credit Program?
Qualifying projects typically involve activities that contribute to the growth and development of technology-focused startups or accelerator programs in Alabama’s tech ecosystem. The types of projects must meet the description provided in Alabama Code § 41-10-842(a).
How does an EDO monetize the Innovate Alabama Tax Credit?
If an EDO’s project is approved for tax credits, then it can transfer those credits to an applicable donor in exchange for cash. The donor would then be able to claim the tax credits, and the EDO would be able to undertake the eligible project after receiving the cash donation.
Can the tax credit be passed through to individual partners or members of a partnership or LLC?
Yes, if earned by a passthrough entity, the tax credit is not required to be taken at the entity level. Instead, it can be allocated to the entity’s partners or members, as applicable, in accordance with the entity’s operating agreement. See Alabama Code § 41-10-844 for additional information.
What happens after an EDO has been awarded tax credits?
Tax credit recipients are required to submit a sequence of reports to Innovate Alabama. Please refer to your funding agreement for information on required reports and due dates. Reporting templates and electronic submission links will be provided in your welcome email.
When does the Innovate Alabama Tax Credit Program sunset?
Unless renewed by the Alabama Legislature, the program will sunset on July 31, 2028. Until then, $25 million has been allocated for the program for each fiscal year.
