Legislation to completely eliminate Alabama’s minimum business privilege tax by 2024 was signed into law Wednesday.
“This will go a long way in providing support for some 230,000 small businesses for years to come,” Gov. Kay Ivey said when she signed Act No. 2022-252 by Rep. Steve Clouse, R-Ozark/Rep. Danny Garrett, R-Trussville/Sen. Tom Butler, R-Madison. The Alabama Revenue Department will have until July 1 to adopt rules to implement the new law.
“This is a huge tax cut” of what “I call the small business nuisance tax,” Butler said.
It cuts in half the $100 minimum business privilege tax to $50 beginning with the 2023 tax year. The minimum would be eliminated completely starting in 2024, ending the annual payment for an estimated 230,000 entities.
The business privilege tax, created in 1999, is based on net worth. Business entities are liable for the tax for each taxable year the entity is in legal existence. The maximum business privilege tax is $15,000.
For more information on Alabama’s business privilege tax, see the frequently asked questions on the Alabama Revenue Department’s website.
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