The Alabama House of Representatives recently passed a bill that would give income tax credit to small businesses in the state employing 75 or fewer people. The credit, worth $1,500, would be given out to businesses for every new, full-time job paying at least $40,000 per year.
The bill, called the Alabama Small Business Jobs Act, was sponsored by Rep. Kyle South, R-Fayette, according to AL.com.
“Over the last 20 years, small businesses have created more than 65% of all new jobs in our nation,” said South, “but Alabama and other states have focused almost exclusively on providing incentives to industries and large employers. By passing my bill, the Legislature can send the strong message that we care about small business owners and employees and understand and value the important role they play in Alabama’s economy.”
This particular piece of legislation is part of a larger legislative agenda, according to the Birmingham Business Journal, belonging to the House Republican Caucus’s “Right for Alabama” initiative.
In addition to the income tax credit, a small business may claim an additional $1,000 tax credit if a new employee is an unemployed veteran recently returning from deployment. This additional credit was part of the Heroes for Hire Act, passed back in 2012, but it can be applied on top of the new $1,500 credit.
In order to qualify for the basic $1,500 income tax credit, a small business must retain the new employee for at least 12 months consecutively and the employee must earn at least $40,000 within that 12-month period. The employee must also be a resident of Alabama.
Although the measures may not apply to many businesses in the state, it’s one small way to ensure that small businesses are given an extra financial boost for supporting their local economies and communities. It’s estimated that around 82% of consumers search online for local businesses, so it’s clear that there’s a high demand for local businesses — and the new bill is a way to make sure that these businesses are able to fill the demand.