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Taxes and Incentives

Mobile area businesses benefit from the comparatively low local and state tax rates. Typically, certain taxes impacting business are eliminated or reduced by local and state incentive programs. And, AIDT, one of the nation's top workforce training program, offers customized, company-specific recruting and training services to new and expanding industry in Alabama at no cost.

SOURCE:
Mobile Area Chamber of Commerce. Download Graph

Local and State Taxes

All real property in Alabama is subject to state, county and local property (ad valorem) taxes unless exempted by law. Additionally, this holds for all manufacturing and non-manufacturing equipment including office furniture and fixtures, computer equipment and other items of personal property if located in the state on October 1.

All pollution control equipment acquired or constructed primarily for the control, reduction or elimination of air or water pollution, is exempt from ad valorem taxes when specifically claimed. Alabama does not impose an inventory tax on finished goods, work-in-process accounts or raw materials stocks.

Real and personal property used for business, commercial, industrial or manufacturing purposes in Alabama is defined as Class 2 property and assessed at 20 percent fair market value. The property (ad valorem) tax rate per $1,000 of assessed valuation is as follows:

Ad Valorem Tax Rates
Municipality

State Mills

+

County Mills

+

School Mills

+

Local Mills

=

Total Mills

Bayou La Batre 6.5 + 20.5 + 21.5 + 5.0 = 53.5
Chickasaw 6.5 + 20.5 + 21.5 + 4.5 = 53.0
Citronelle 6.5 + 20.5 + 21.5 + 6.0 = 54.5
Creola 6.5 + 20.5 + 21.5 + 0.0 = 48.5
Dauphin Island 6.5 + 20.5 + 21.5 + 5.0 = 53.5
Mt. Vernon 6.5 + 20.5 + 21.5 + 0.0 = 48.5
Saraland 6.5 + 20.5 + 21.5 + 3.5 = 52.0
Satsuma 6.5 + 20.5 + 21.5 + 5.0 = 53.5
Mobile 6.5 + 20.5 + 29.5 + 7.0 = 63.5
Prichard 6.5 + 20.5 + 29.5 + 5.0 = 61.5
Unincorporated 6.5 + 20.5 + 21.5 + 0.0 = 48.5

All real and personal property subject to property tax in Alabama is valued at fair and reasonable market value. Real property improvements are typically based on new replacement cost, then depreciated based on the condition of the property plus takes into consideration when it is no longer being used. Land is usually valued using the market or sales comparison approach reflecting sales prices for similar property. A value per square foot or front foot is also assigned.

Personal property is also valued by using the new replacement cost, then depreciated based on condition and usage. Depreciation (derived from tables developed by the Department of Revenue) is then applied to the replacement cost. For more information regarding ad valorem taxes, visit the "State of Alabama Property Tax Index" at www.ador.state.al.us/advalorem/index.html.

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Sales & Use Tax

Alabama has three types of Sales & Use Tax: general, machinery and automotive. The applicable rates for the various municipalities in Mobile County are as follows:
 
General Sales & Use Tax Rates
Municipality

State Tax %

+

County Tax %

+

Local Tax %

=

Total Tax %

Bayou La Batre 4.00 + 1.50 + 4.50 = 10.00
Chickasaw 4.00 + 1.50 + 4.50 = 10.00
Citronelle 4.00 + 1.50 + 3.00 = 8.50
Creola 4.00 + 1.50 + 4.00 = 9.50
Dauphin Island 4.00 + 1.50 + 3.00 = 8.50
Mt. Vernon 4.00 + 1.50 + 4.00 = 9.50
Saraland 4.00 + 1.50 + 4.50 = 10.00
Satsuma 4.00 + 1.50 + 4.50 = 10.00
Semmes 4.00 + 1.50 + 2.50 = 8.00
Mobile 4.00 + 1.00 + 5.00 = 10.00
Prichard 4.00 + 1.00 + 5.00 = 10.00
Unincorporated 4.00 + 1.50 + 0.00 = 5.50

Machinery Sales & Use Tax Rates
Municipality

State Tax %

+

County Tax %

+

Local Tax %

=

Total Tax %

Bayou La Batre 1.50 + 1.50 + 1.00 = 4.00
Chickasaw 1.50 + 1.50 + 1.50 = 4.50
Citronelle 1.50 + 1.50 + 0.75 = 3.75
Creola 1.50 + 1.50 + 1.50 = 4.50
Dauphin Island 1.50 + 1.50 + 3.00 = 6.00
Mt. Vernon 1.50 + 1.50 + 4.00 = 7.00
Saraland 1.50 + 1.50 + 1.50 = 4.50
Satsuma 1.50 + 1.50 + 2.00 = 5.00
Mobile 1.50 + 1.00 + 2.25 = 4.75
Prichard 1.50 + 1.00 + 0.75 = 3.25
Unincorporated 1.50 + 1.50 + 0.00 = 3.00

Automotive Sales & Use Tax Rates
Municipality

State Tax %

+

County Tax %

+

Local Tax %

=

Total Tax %

Bayou La Batre 2.00 + 1.00 + 1.00 = 4.00
Chickasaw 2.00 + 1.00 + 1.50 = 4.50
Citronelle 2.00 + 1.00 + 0.75 = 3.75
Creola 2.00 + 1.00 + 1.50 = 4.50
Dauphin Island 2.00 + 1.00 + 2.00 = 5.00
Mt. Vernon 2.00 + 1.00 + 0.50 = 3.50
Saraland 2.00 + 1.00 + 2.00 = 5.00
Satsuma 2.00 + 1.00 + 2.00 = 5.00
Mobile 2.00 + 0.50 + 2.00 = 4.50
Prichard 2.00 + 0.50 + 0.75 = 3.25
Unincorporated 2.00 + 1.50 + 0.00 = 3.50

The city of Mobile enacted legislation exempting local sales tax on the sale or sales of specified ships, railroad cars, aircraft and materials, equipment and machinery that become component parts of those items; as well as materials and supplies used in the repair and modification of those items. The use tax rates are the same as sales tax and gross receipts. For more information regarding Sales & Use Taxes, visit the "State of Alabama Sales & Use Tax Index" at www.ador.state.al.us/salestax/index.html.

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Local Incentives

Local Property Tax Abatement (Ad Valorem)
Property tax abatements are available for qualifying projects for a 10-year maximum period excluding school millage. Generally, the project is titled in the public body and leased to the private user with an option to purchase for a nominal sum at the end of the lease term.

Special Federal Incentives
Renewal Community
Portions of the Mobile/Prichard area (Brookley Aeroplex included) are designated as renewal communities by the U.S. Department of Housing and Urban Development.
  • Tax credits up to $1,500 annually;
  • Section 179 deduction on depreciable property;
  • 0 percent capital gains rate for a minimum of 5 years; and
  • Brownfields cleanup cost deductions
  • .

    State of Alabama

    Capital Investment Tax Credit
    This program allows a corporate income tax credit of up to 5 percent of the initial capital cost per 20 years of qualified projects to new and expanding companies. The credit is applied against earnings before taxes (EBT) on the corporate income statement.

    Site Preparation Grant Program
    Alabama Act No. 97-645 authorizes the State Industrial Development Authority to sell bonds to offer grants to counties, municipalities, local industrial development boards or authorities, or economic development authorities, airport authorities or public corporations, to pay for site preparation for land owned or possessed by lease by these entities.

    Sales & Use Tax Exemptions
    Credit is permitted for sales and use taxes paid to another state or subdivision thereof. The total credit allowed cannot exceed the amount of state or local sales and use tax liability. Exemptions are available on the purchases of construction materials and machinery and equipment purchased for the new facility, as well as materials or products that become an ingredient or component part of products sold by a manufacturer.

    Enterprise Zone

    Alabama’s Enterprise Zone Act of 1987 offers some of the best tax and non-tax incentives in the country. Mobile has three designations including:
  • Employer’s maximum tax credit on operations in the EZ shall not exceed $2,500 per new permanent employee hired (applies to ANY state income tax liability);
  • Exemption from state sales and use tax on building construction materials and machinery and equipment; and
  • Exemption from state sales and use tax on improvement to housing in an EZ.

  •  
    Industrial Development Bond Financing
    Local authorities may issue tax exempt bonds for financing industrial development for new and expanding businesses. There is no ad valorem tax assessment on land, building and/or equipment when financed by bonds. Sales & Use Tax exemptions also apply.

    AIDT
    AIDT, often referred to as Alabama’s No. 1 incentive, is designed to recruit and train a company’s entire workforce to company specifications at no cost. In Mobile, courses are established in aviation, welding, electro-mechanical maintenance, distribution control systems, instrumentation, office automation desktop publishing and management. Other courses are custom designed for new and expanding Alabama businesses.

    Workforce Investment Act (WIA)
    Job training funds are made available through the federal WIA and administered locally by Mobile Works to offer education and training programs designed to prepare individuals for occupations in demand, as well as assist local employers in filling labor force needs.
     
    Foreign Trade Zone (FTZ)
    The Mobile FTZ No. 82 is located through major parts of Mobile County. Approved usages include storage, processing, manufacturing and display of merchandise. Companies such as Atlantic Marine, Evonik Degussa and Zeneca are all active sub-zones.

    SOURCE: Mobile Area Chamber of Commerce

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    Incentive Program Resources

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