Shoals Economic Development Authority

DOING BUSINESS
IN THE SHOALS

Economic Data

Business Climate

Shoals Economic Development Authority

Phone:
(256) 764-0351
1-800-239-6087
FAX: (256) 764-3850
20 Hightower Place
Suite 1
P.O. Box 580
Florence, Alabama 35630

E-mail:

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TAXES

Real Property Tax
Industrial real property is assessed as Class II property, which has a basis rate of 20% of fair market value. Non-educational related ad valorem tax abatements are available to qualified companies meeting law requirements. Single-family dwellings are rated as Class III and have a 10% basis rate.

Machinery and Tools Tax
Both machinery and tools are considered to be personal property and are rated as Class II with a 20% basis. Non-educational tax abatements are available to qualified companies. Mileage (ad valorem) rates are the same as real property rates.

Sales Tax
Combined state and local sales tax rates range from 5.5% to 9% depending on the community. Sales tax on machinery averages approximately 2%.

Inventory Tax
There are no raw materials or finished product inventory taxes in the State of Alabama.

Corporate Income Tax
Corporate income tax is 6.5 percent. Corporations pay Alabama income tax based on their net taxable income derived from business conducted within the state. The amount of Alabama net income apportioned to Alabama is determined by applying an equally weighted three factor formula of property, payroll, and sales to total net income.

There are constitutional restrictions that add to the stability of the Alabama corporate tax environment, low tax rates and a federal income tax deduction. Amendment 212 of the Constitution allows the corporate taxpayer to deduct from its gross apportioned and allocated income the apportioned amount of federal income tax paid or accrued. Alabama still maintains one of the lowest corporate income tax rates in the nation. There are no local corporate income taxes.

Personal Income Tax
The State of Alabama has a personal income tax that ranges from 2% to 5%. There are no local income taxes.

Unemployment Tax
State unemployment compensation tax is assessed on the first $8,000 the employer pays on each employee. The rate varies according to the employer's unemployment experience modified by statewide experience. This can be as low as .20% or as high as 6.8%.

Alabama's corporate income tax is 6.5% of the income annually from business within the state with deductions allowed for federal income tax paid or accrued for foreign companies and 5% of the net income annually with deductions allowed for federal income tax paid or accrued for domestic corporations. The State of Alabama has no inventory taxes.

Download a General Summary of State Taxes in PDF format from the Alabama Department of Revenue website.