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AL — State Policy Updated January 2026

Alabama

Chapter 9B Tax Abatements Alabama Jobs Act Credits Local government approval required Minimum job and wage thresholds E-Verify enrollment

Overview

Alabama courts hyperscale data centers with long-term tax incentives tied to capital investment. The state’s Chapter 9B program offers 10-30 year abatements on sales and property taxes for projects investing anywhere from tens of millions to over $400 million.[1][2] The Alabama Jobs Act provides additional cash rebates and investment credits.[3] While state incentives are generous, local zoning approvals can be contentious—Bessemer’s 2025 rezoning fight over a $14.5 billion data center shows how community pushback and transparency concerns can slow or reshape projects.[4][5]

Incentives

Chapter 9B Tax Abatements

Alabama allows cities, counties, and industrial development authorities to grant tax abatements for qualifying data centers under the Tax Incentive Reform Act of 1992.[1][2]

  • Abatement duration scales with investment: 10 years for projects investing up to $200 million over 20 years, 20 years for $200-400 million, and 30 years for investments exceeding $400 million.[2]
  • Covers state and local non-educational sales and use taxes, certain property taxes, and mortgage and recording taxes.
  • Projects must create at least 20 jobs with average total compensation of $40,000 or more annually.[2]
  • The educational portion of local sales and property taxes is not eligible for abatement.[1]

Alabama Jobs Act Credits

The Alabama Jobs Act offers two discretionary incentives managed by the Department of Commerce: a Jobs Credit and an Investment Credit.[3]

  • Jobs Credit: A cash rebate of up to 3% of payroll for Alabama resident employees for up to 10 years. Higher percentages apply in targeted or economically distressed counties and for technology companies.[3]
  • Investment Credit: Up to 1.5% annually of qualified capital investment for up to 10 years (15 years in targeted counties). Can offset multiple Alabama tax liabilities.[3]
  • Data centers are listed as a qualifying project type, with job thresholds varying by county and project category.[3]

Requirements and Conditions

Qualifying for State Incentives

Chapter 9B abatements require local government approval before any benefits take effect.[1]

  • Purchases made before the local authority approves the abatement are not eligible for the tax break.[1]
  • The Alabama Department of Revenue requires an abatement package within 90 days of approval, including an executed agreement, certified resolution, and proof of E-Verify enrollment.[1]
  • The abatement only applies to the non-educational portion of taxes; school funding taxes remain in place.[1]

Local Zoning and Public Approval

Local rezoning decisions can be the decisive hurdle, even when state incentives are available.

  • Bessemer’s City Council approved rezoning roughly 700 acres from agricultural to light industrial in November 2025 to accommodate a proposed hyperscale data center (Project Marvel).[4]
  • A temporary restraining order initially blocked the rezoning vote, demonstrating how litigation can delay or complicate approvals.[4]
  • Community groups raised transparency, water use, and diesel generator emissions concerns during the approval process.[5]

Utility and Grid Rules

Alabama Power stated that large-load customers, including data centers, pay the full cost to serve their needs and are subject to minimum-bill and minimum-term provisions to protect other ratepayers.[4] The state does not appear to have active Public Service Commission proceedings specific to data center interconnection rules as of early 2026.

What to Watch

  • Local zoning battles: Bessemer’s Project Marvel approval illustrates how transparency demands and community opposition can become de facto constraints on data center siting, even when state incentives are in place.[4][5]
  • Water and environmental review: The Southern Environmental Law Center and local residents have flagged potential water use and air quality impacts from diesel generators as unresolved issues for future large-load projects.[5]
  • State-level policy updates: Monitor whether Alabama revises Chapter 9B thresholds or adds new data center-specific requirements in response to the hyperscale buildout wave.

Sources

[1] Alabama Department of Revenue, “Chapter 9B Abatements,” Alabama Department of Revenue (Tax Incentives), n.d., https://www.revenue.alabama.gov/tax-incentives/chapter-9b-abatements/ (accessed 2026-01-07).

[2] Alabama Department of Revenue, “Summary of Alabama Taxes and Tax Incentives,” August 2023, https://www.revenue.alabama.gov/wp-content/uploads/2022/05/Taxincentives_Summary.pdf (accessed 2026-01-07).

[3] Alabama Department of Commerce, “Alabama Jobs Act: Jobs Credit and Investment Credit (Incentive Summary),” updated March 2025, https://www.madeinalabama.com/resources/documents/job-acts-summary/ (accessed 2026-01-07).

[4] Morgan Hightower, “Bessemer City Council approves rezoning for $14.5 billion data center project despite transparency concerns,” WBRC 6 News, November 19, 2025, https://www.wbrc.com/2025/11/19/bessemer-city-council-approves-149-billion-data-center-project-despite-transparency-concerns/ (accessed 2026-01-07).

[5] Southern Environmental Law Center, “Bessemer City Council greenlights controversial data center rezoning,” press release, November 18, 2025, https://www.selc.org/press-release/bessemer-city-council-greenlights-controversial-data-center-rezoning/ (accessed 2026-01-07).