Montgomery – On the first day that bills could be brought to the chamber floor for consideration in the 2016 regular legislative session, the Alabama House on Tuesday approved economic development and job creation legislation sponsored by State Rep. Kyle South (R – Fayette) that would provide a state income tax credit to small businesses for each new employee they hire.
The bill is included in the House Republican Caucus’s “Right for Alabama” legislative agenda that was announced prior to the session’s start.
“Over the last 20 years, small businesses have created more than 65 percent of all new jobs in our nation, but Alabama and other states have focused almost exclusively on providing incentives to industries and large employers,” South said. “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.”
Under the provisions of South’s legislation, small businesses with 75 employees or less could claim a $1,500 tax credit for each qualified, new, full-time employee hired.
If the new employee is an unemployed veteran recently returned from deployment, an additional $1,000 tax credit may be claimed as part of the Heroes for Hire Act passed by the Legislature in 2012.
To qualify for the credit, businesses must retain the new employee for a consecutive 12-month period, and the employee must earn a salary of $40,000 a year or more. In addition, the employee must be an Alabama resident in order to ensure that the credits are being used on behalf of Alabamians.
South noted that one of the best features of his bill is that it pays for itself.
“We can offer these credits with little or no loss of state budget dollars because the income taxes that these previously unemployed workers will begin to pay will offset the cost of providing the tax credit,” South said. “Through whichever prism you view it, this bill is a win for small business owners, it’s a win for the newly-hired and their families, and it’s a win for the state.”