Alabama Excise Credits - Instructions

Excise Credits - Instructions
Schedule EC Instructions CY 2025_7-31-24_F.pdf
InstructIons For the PreParatIon oF
alabama DePartment oF revenue

SCHEDULE

EC

INSTRUCTIONS

business credits

2025

Use This Schedule to Compute Credits Available on the Financial Institution Excise Tax Return (Form ET-1)

Informational Requirements

B2. Enter the number of full time employees on 12-31-2022.
B3. Subtract line B2 from line B1.

If the Financial Institution receives distributions from Schedule K-1 income
generated from a Pass-Through Entity, and the taxpayer has a credit that may be
claimed on the Form ET-1 from the Pass-Through Entity, the taxpayer should enter
the allocable amount of the credit from the Schedule K-1 into the appropriate field on
the Schedule EC and attach the Schedule K-1 to the return.

B4. Enter the number of qualifying employees included in the number on B3 for
which the credit is claimed.
B5. Multiply line B4 by 1,000. Enter the amount.
B6. TOTAL FULL EMPLOYMENT ACT CREDIT UTILIZED. If B5 is less than (<)
A9, enter the amount from B5 on B6. If B5 is greater than (>) A9, enter the
amount from A9 on B6 and zero (0) on B7.

If the Financial Institution will claim the Income Tax Capital Credit resulting from
distributions from Schedule K-1 income generated from a Pass-Through Entity, the
taxpayer must complete Schedule EC, Section D, Part I, and attach Form KRCC and
Schedule KRCC-B to the ET-1 return.

B7. Remaining Tax Liability Due: If Section B, Part A, Line A9 is greater than (>)
B6, enter the difference on B7 (Section B, Part A, Line A9 - B6 = B7) and
proceed to Part C

Negative Numbers

Part C – Investment Credit (Alabama Jobs Act)

Enter all negative numbers with the negative sign. Do not use parenthesis when
entering negative numbers.This does not pertain to those fields with the parenthesis
‘ ( ) ’ displayed on the form.

Act Number 2023-34 and Section 40-18-376 provide for an investment credit to
certain businesses for approved projects that create new jobs in Alabama. The credit
is an amount up to 1.5 percent of a qualified capital investment annually, for a period
not to exceed 10 years to be applied against the income tax, estimated income taxes,
the financial institution excise tax, or the insurance premium tax, with additional offsets of utility gross receipts and utility service use taxes. The investment credit, provided for by the Alabama Jobs Act, may be claimed as a credit against taxes paid with
a carryforward for earned but unused amounts to the extent allowed in the project
agreement. Any unused portion of this credit may be carried forward for up to five
years. The approval of this credit is managed through the Department of Commerce.
Once they have approved and issued the certificate, you will be notified to fill out an
allocation schedule through MAT.

SPECIFIC INSTRUCTIONS
Section A – CURRENT YEAR TAX LIABILITY
Enter Alabama Financial Institution Excise Tax due from Form ET-1, page 1, line
16 here.

Section B – CURRENT YEAR CREDITS Pre-Distribution
Part A – AL Taxes Used as Credits
The taxpayer must provide a complete listing of the taxes used as credits, in the
format required by the Alabama Department of Revenue, upon receiving a written request from the Department. Attach additional schedules as needed.
A1. Enter Sales Taxes: Supplies, etc. used as Credits
A2. Enter Furniture, Fixtures used as Credits
A3. Enter Use Taxes used as Credits
A4. Enter State Tax on Utilities used as Credits
A5. Enter State Tax on Telephone used as Credits
A6. Enter Other Allowable Taxes used as Credits
A7. Add lines A1 through A6. CREDIT ALLOWABLE.
A8. TOTAL ALABAMA TAXES USED AS CREDITS UTILIZED. If A7 is less than
(<) Section A, enter the amount from A7 on A8. If A7 is greater than (>) Section A, enter the amount from Section A on A8 and zero (0) on A9.
A9. Remaining Tax Liability Due: If Section A is greater than (>) A8, enter the difference on A9 (Section A – A8 = A9) and proceed to Part B.

C1a-C1c Enter the Project Number(s) and the amount of the credit claimed from
the certification issued by the Alabama Department of Commerce
C2. Add lines C1a through C1c. CREDIT ALLOWABLE.
C3. TOTAL INVESTMENT CREDIT (ALABAMA JOBS ACT) UTILIZED. If C2 is
less than (<) B7, enter the amount from C2 on C3. If C2 is greater than (>)
B7, enter the amount from B7 on C3 (Section B, Part B, Line B7 = C3) and
zero (0) on Section C, Line 1.
C4. If C2 is greater than (>) C3, this is the amount of Investment Credit (Alabama
Jobs Act) remaining to CARRYFORWARD. Enter the amount on C4 and skip
to Section C
C5. Remaining Tax Liability Due: If Section B, Part B, Line B7 is greater than (>)
C3, enter the difference on C5 (Section B, Part B, Line B7 – C3 = C5) and proceed to Part C, Line C6.
C6. Investment Credit (Alabama Jobs Act) Credit Forward Prior Years

Part B – Full Employment Act of 2011 Credit

C6a-C6c. Enter the Project Number(s), Year Carryforward Generated
(MM/DD/YYYY) and the amount of the credit claimed from prior year(s).

Sections 40-18-290 through 40-18-293 provide for a tax credit against Alabama
income tax for small businesses which employ 50 or fewer employees and create
new jobs paying more than ten dollars ($10) per hour. Employers will receive an income tax credit equal to one thousand dollars ($1,000) and shall be available in the
tax year during which the employee has completed 12 months of consecutive employment. The employer must have a net increase in the total number of full time
employees in Alabama on the last date of each tax year during which employees are
hired for which the employer claims a credit, over the number employed in Alabama
as of the last day of the tax year immediately preceding the first employment year. The
income tax credit may be claimed for employees who are hired following June 9,
2011. This tax credit shall not exceed the amount of the taxpayer’s state tax liability
for which the credit is claimed. This credit is not refundable or transferable and cannot be taken in conjunction with the Alabama Small Business and Agribusiness Jobs
Credit. This credit is required to be submitted through MAT.
B1. Enter the number of full time employees on 12-31-2023.

C7. Add lines C6a through C6c. CREDIT ALLOWABLE.
C8. TOTAL INVESTMENT CREDIT (ALABAMA JOBS ACT) UTILIZED. If C7 is
less than (<) C5, enter the amount from C7 on C8.
C9. Alabama Financial Institution Excise Tax less Pre-Distribution Credits (Net
Alabama Financial Institution Excise Tax): If C5 is greater than (>) C8, enter
the difference on C9 (C5 – C8 = C9).

Section C – Allocable Amount to General Fund
1. Net Alabama Financial Institution Excise Tax less Pre-Distribution Credits multiplied by 50% (C9 x .50).
2. Total Amount allocated to General Fund. Enter amount here and Section E,
Part D, Column 3.
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Section D – CURRENT YEAR CREDITS –
Limited to the General Fund Portion of
Distribution

Alabama Renewal Commission.
G2. Pro rata share of credit from Schedule K-1. Enter the FEIN number of the
entity. If credit is from more than one entity, attach schedule.
G3. Amount Approved for contribution.
G4. CREDIT AVAILABLE. Add G2 and G3.
G5. MAXIMUM CREDIT ALLOWABLE. Multiply Total Amount allocated to General Fund by 50% (.50), (Section C, line 2 x .50). Enter here.
G6. CREDIT ALLOWABLE. Enter the lesser of line G4 or line G5.
G7. MAXIMUM CREDIT ALLOWABLE FOR PRIOR YEAR CARRYFORWARD.
Subtract line G6 from line G5. Enter here and line G8a, Column 3.
G8a- G8e. Enter the calculation of allowable prior year credit carryforward here.
If Part G, line G7 is equal to zero, do not complete this section.
Column 1. Enter the credit year of the carryforward.
Column 2. Enter the amount of Credit Carryforward Available.
Column 3. Enter the Credit Limitation. Line G8a, Column 3 equals the amount
from line G7. Lines G8b, G8c, G8d, and G8e, Column 3 equals
the amount in Column 5 of prior row.
Column 4. Enter the lessor of Column 2 or Column 3.
Column 5. Subtract Column 3 amount from Column 4 amount.
G8f. Maximum Credit Carryforward Available. Enter the sum of Column 4, line
G8a, G8b, G8c, G8d, and G8e here and on Section F.

Part D – Veterans Employment Act Employer Credit
Act 2018-194 amends Sections 40-18-320 and 40-18-321 for all tax years beginning on or after January 1, 2018 to rename the Heroes for Hire Tax Credit Act of 2012
as the Veterans Employment Act. The act adds Sections 40-18-320.1 and 40-18-325
to the Code of Alabama, 1975. A qualified employer subject to the requirements of the
act shall be eligible for an additional nonrefundable credit against the income tax or
financial institution excise tax in the amount of $2,000 for each new unemployed or
combat veteran hired for a full-time position paying at least fourteen dollars per hour,
where majority of the duties are at a business located within Alabama. The additional
credit shall only be available in the tax year during which the employee has completed 12 months of consecutive employment. This credit is required to be submitted
through MAT.
D1. Enter the number of unemployed veterans included in Section B, Part B, B4
– Full Employment Credit.
D2. Multiply line D1 by $2,000. Enter the amount.

Part E – 2013 Alabama Historic Rehabilitation Tax Credit

Part H – Innovate Alabama Tax Credit

Act Number 2014-452 amends Act 2013-241. The act provides an income tax
credit against the tax liability of the taxpayer for the rehabilitation, preservation, and
development of historic structures. The credit is equal to 25% of the qualified rehabilitation expenditures for certified historic structures. The act also provides a tax credit
equal to 10% of the qualified rehabilitation expenditures for qualified pre-1936 nonhistoric structures. No tax credit claimed for any certified rehabilitation may exceed
$5,000,000 for all allowable property types except a certified historic residential structure, and $50,000 for a certified historic residential structure. The entire credit may be
claimed by the taxpayer in the taxable year in which the certified rehabilitation is
placed in service. This credit is not refundable, but any unused portion of the credit
may be carried forward for up to 10 additional tax years. This credit is required to be
submitted through MAT.
E1a- E1c. Enter the Project Number(s) assigned by the Alabama Historic Tax
Commission, the date the project(s) were placed in service, and the
amount of credit.
E2. Enter the amount of the 2013 Alabama Historic Rehabilitation Tax Credit
from the Alabama Historical Commission Tax Credit Certificate. CREDIT ALLOWABLE.

Act Number 2023-33 authorizes a tax credit to corporations that make cash contributions to economic development organizations (EDO) approved by Innovate Alabama. The act allows the approved tax credit to be taken against the state portion of
the financial institution excise tax. Approved tax credits are granted up to the amount
of cash contributed, not to exceed the amount approved by Innovate Alabama for a
specific EDO. The credit cannot exceed 50% of the corporation’s income tax liability
for the current year and any unused credit may be carried forward for up to five years.
The tax credit is not transferable to another taxpayer. To report a cash contribution
to an approved Innovate Alabama EDO, log in to your MAT account to complete the
contribution submission.
H1. Enter the name of the Economic Development Organization Approved by Innovate Alabama.
H2. Pro rata share of credit from Schedule K-1. Also enter the FEIN of entity. If
credit from more than entity, attach schedule).
H3. Enter the amount approved by Innovate Alabama.
H4. CREDIT AVAILABLE. Add H2 and H3.
H5. MAXIMUM CREDIT ALLOWABLE. Multiply Total Amount allocated to General Fund by 50% (.50), (Section C, line 2 x .50). Enter here.
H6. CREDIT ALLOWABLE. Enter the lesser of line H4 or line H5.
H7. MAXIMUM CREDIT ALLOWABLE FOR PRIOR YEAR CREDIT CARRYFORWARD. Subtract line H6 from line H5. Enter here and on line H8a, column 3.
H8a- H8e. Enter the calculation of allowable prior year credit carryforward here.
If Part H, line H7 is equal to zero, do not complete this section.
Column 1. Enter the credit year of the carryforward.
Column 2. Enter the amount of Credit Carryforward Available.
Column 3. Enter the Credit Limitation. Line H8a, Column 3 equals the amount
from line H7. Lines H8b, H8c, H8d, and H8e, Column 3 equals
the amount in Column 5 of prior row.
Column 4. Enter the lessor of Column 2 or Column 3.
Column 5. Subtract Column 3 amount from Column 4 amount.
H8f. Maximum Credit Carryforward Available. Enter the sum of Column 4, line
H8a, H8b, H8c, H8d, and H8e here and on Section F.

Part F – Apprenticeship Tax Credit
Act Number 2019-506 amends Act Number 2016-314. The act increased the credit
for eligible employers that employ an apprentice for at least 7 full months of the prior
taxable year, not to exceed 10 apprentices, from $1,000 to $1,250; provides an additional $500 tax credit to eligible employers for hiring in school youth apprentices for
90 days, under the age of 18; and extend the tax credit through 2025. For eligibility
requirements see §§40-18-422, 40-18-423 and 40-18-424. Credits are nontransferable, nonrefundable, and not available for an individual apprentice for more than four
taxable years. These credits are required to be submitted through MAT.
F1. Enter the amount from the Apprenticeship Tax Credit Certificate issued by the
Workforce Development Division of the Department of Commerce.

Part G – Growing Alabama Credit
Act Number 2023-24 and Section 40-18-417.4 authorize a tax credit to corporations that make cash contributions to economic development organizations (EDO)
approved by the Renewal of Alabama Commission. Act Number 2021-2 extends the
tax credit to be taken against the state portion of the financial institution excise tax.
The credit is the amount of the cash contribution made not to exceed the reservation
amount as verified by the EDO. The credit cannot exceed 50% of the corporation’s
income tax liability for the current year. This credit is nontransferable and may be carried forward for up to five years. To report a donation to an EDO, log in to your MAT
account and from the FIE account under “I Want To” select “Report a donation to an
EDO”. Then complete the donation submission.
G1. Enter the name of the Economic Development Organization Approved by the

Part I – Income Tax / Capital Credit
Sections 40-18-190 through 40-18-203 provide for a tax credit against Alabama
income tax with respect to income generated by or arising out of a qualifying project
undertaken by certain existing businesses and certain new businesses to be located
in the state. A statement of intent to invest in a qualifying project must be filed prior
to the qualifying project being placed in service and must be approved by the Alabama
Department of Revenue prior to the project entity taking the credit. The credit allowable is up to 5 percent of the qualifying project’s allowable capital costs for each of 20
years, limited to the tax liability generated by or arising out of the qualifying project,
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and is applied after all deductions, exemptions and other credits have been taken.
A project entity that is a financial institution must complete Form AR-C on their
MAT account prior to filing Alabama Form ET-1. The AR-C replaces both the Forms
AR and KRCC.
However, if the project entity is a pass-through entity where the financial institution is a member or partner, the pass-through will complete Form KRCC for each
member/partner allocating the project income and income tax capital credit available
based on ownership. The financial institution that is claiming the income tax capital
credit will receive Form KRCC from the pass-through entity and complete Form
KRCC-B. Both these forms must be attached to Schedule EC and the boxes checked
on Schedule EC, Part I.
I1a – I1g. Enter the Project Number(s) assigned by the Alabama Department of
Revenue and the amount of the Capital Credit claimed from Form ARC, line 10 or Schedule KRCC-B, Part II, line 4.
I2. Total Income Tax Capital Credit Available. CREDIT ALLOWABLE.
For further information regarding the income tax/ capital credit and the necessary
forms to claim the capital credit, visit the Alabama Department of Revenue’s Web
site at www.revenue.alabama.gov under the Tax Incentives page, or contact the Department at P.O. Box 327001, Montgomery, AL 36132-7001 or 334-242-1175.

ing with the most current year. Tax years for which a credit was utilized should not
be listed. The utilized credits are shown in column 4.
Column 1. Enter the Type of Credit generated
Column 2. Enter the tax year end (MM/DD/YYYY) in which the credit was
generated.
Column 3. Enter the amount of the credit generated by the corporation for the tax
period in Column 2.
Column 4. Enter the amount of the credit utilized in years prior for the credit listed
in Column 3.
Column 5. Subtract Column 4 amount from Column 3 amount. Enter the amount
of the credit available to be utilized in the current tax period, not to exceed the remaining tax to be offset.
Column 6. Enter the amount of Allowable Credit Carryforward. For the Growing
Alabama Credit and Innovate Alabama Credit carryforward computation, the Allowable Credit Carryforward in Column 6 is limited to the
Maximum Credit Carryforward Available This Year in Column 4 of
Section D, Part G, Line G8f, and Section D, Part H, Line H8f, respectively. For all other credits, Column 6 equals the amount in Column 5.
Columns 7-9. Subtract the Remaining Tax to be Offset (Section E, Part H, Column 5) from the Allowable Credit Carryforward (Section F, Column 6). If the Remaining Tax to be Offset is less than or equal to
the Allowable Credit Carryforward, enter the Remaining Tax to be
Offset in Column 7 and enter the excess of the Amount Available
to use this Period in Column 8. If the Remaining Tax to be Offset
is greater than Section F, Column 6, enter the Allowable Credit
Carryforward in Column 7 and enter the difference of the Remaining Tax to be Offset and the Amount used this Period in Column 9, then proceed to the next available prior year credit. For the
remaining rows, the Amount used this Period in Column 7 is limited to the Remaining Tax to be Offset in Column 9 of the preceding row.

Section E – Current Credit Summary
Part D through Part I. For each credit available for utilization, repeat the steps on
each line by row until all available current year credits have been used or no tax remains to be offset.
Column 1. Type of Credit generated
Column 2. Enter the amount of the credit generated by the corporation for the tax
period from Section D.
Column 3. Enter the amount of the remaining tax to be offset.
Column 4. Enter the amount of the current credit utilized to offset the remaining
tax due.
Column 5. Subtract Column 3 amount from Column 4 amount.
Column 6. Subtract Column 2 amount from Column 4 amount.

Section F – Credit Carry Forward Prior Years

Section G – Total Credits

Lines 1 through 10. For each carryforward available for utilization, repeat the
steps on each line by row until all available prior year credit carry forward credits have
been used or no tax remains to be offset.
Begin Credit Carry Forward from Prior Years with the oldest year first and end-

Line 1. Enter the Total Pre-Distribution and Current Credits from Section B, Lines
A8, B6, C3, C8 and Section E, Column 4.
Line 2. Enter the Total Prior Year Credit Carryforward from Section F, Column 7.
Line 3. Add line 1 and line 2. Enter the total here and on Form ET-1, page 1, line 17.

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