Business privilege tax instructions

Sections 40-14A-21 through 40-14A-29, Code of Alabama 1975.

The tax is calculated on net worth plus additions, minus exclusions, times the apportionment factor, less the deductions, which equals taxable net worth.

The rate is based on the ability to pay and is determined by the entity’s federal taxable income apportioned to Alabama. The rate rages from $.25 to $1.75 for each $1,000 of net worth in Alabama.

If taxable income of the taxpayer is:

• Less than $1, the tax rate shall be $0.25 per $1,000
• At least $1 but less than $200,000, the tax rate shall be $1.00 per $1,000
• At least $200,000 but less than $500,000, the tax rate shall be $1.25 per $1,000
• At least $500,000, but less than $2,500,000, the tax rate shall be $1.50 per $1,000
• At least $2,500,000, the tax rate shall be $1.75 per $1,000

Minimum privilege tax is $100; plus the $10 Secretary of State annual report fee for corporations. For the taxable year beginning after December 31, 2022, taxpayers who would otherwise be subject to the minimum tax due of $100 shall pay $50 in lieu thereof.

Maximum privilege tax is $15,000 for all years after 2000, unless otherwise stated. The maximum privilege tax for financial institutions and insurance companies is $3,000,000 for each tax year.

The maximum privilege tax for an electing Family Limited Liability Entity is $500.

A portion of the privilege tax will be distributed to each county and the remainder will be distributed to the General Fund.