HB346, known as the Alabama Workforce Housing Tax Credit Act, establishes a tax credit program to support the development of qualified workforce housing projects. The act defines relevant terms, sets a maximum annual award amount for projects, and allows the tax credits to be claimed for a period of 10 years against the tax liability of qualified taxpayers, with provisions for carrying forward unused credits. A minimum of 20% and a maximum of 25% of the annual award cap is reserved for projects in rural areas, as designated by the Alabama Housing Finance Authority, which is also responsible for implementing and administering the act. The bill details the process for awarding tax credits, including reservation and determination letters, and specifies that the total amount of tax credits awarded cannot exceed the award cycle cap. The tax credit is non-refundable but can be allocated by pass-through entities and used to offset the state portion of the financial institution excise tax.

The bill further outlines that project owners must submit an eligibility certificate to claim the tax credit, and if federal low-income housing credits are recaptured or disallowed, a corresponding percentage of workforce housing tax credits must also be recaptured, increasing the taxpayer's income tax liability. Insurance companies can claim the credit without incurring additional taxes, and the credit can offset any retaliatory tax imposed. The authority will adopt guidelines and qualified allocation plans, with preferences for applications offering after-school care. The tax credit will not be available for federal low-income housing tax credit applications submitted after September 30, 2027, but does not affect projects with substantially complete applications by that date. The credit can be claimed for taxable years beginning on or after January 1, 2025, and the act takes effect on October 1, 2024. The Senate passed the bill with an insertion on May 7, 2024.

Statutes affected:
Introduced: 27-3-29, 27-4A-3, 40-16-4, 40-18-2, 27-3-29, 40-1-50
Engrossed: 27-3-29, 27-4A-3, 40-16-4, 40-18-2, 27-3-29, 40-1-50
Enrolled: 27-3-29, 27-4A-3, 40-16-4, 40-18-2, 27-3-29, 40-1-50