Technology Innovation Grant (Innovating Alabama Tax Credit Program) is sponsored by State of Alabama. This program funds technology accelerators and innovative companies through the Innovating Alabama Tax Credit Program.

It fosters economic development by supporting economic development organizations (EDOs) in creating and operating tech accelerator programs, with a focus on underrepresented companies including those targeting minority entrepreneurs, rural communities, and women-owned businesses. The program also targets the growth of innovative companies, providing tax credits to EDOs that support specific for-profit entities.

Tax Credit Program - Innovate Alabama Tax Credit Project Application Reserve Tax Credits (Donors) Sample EDO Status Letter Form Sample Tax Credit Application Letter of Support Donor Template Audited Financials Report Tax Credit Recipients List APPLICATION opening date and Deadline The following dates are subject to change: New EDO Designation Application Period: Jan 12 at 9 a. m. CST – Feb 20, 2026 at 5 p.

m. CST New EDO Designation Approvals: March 9, 2026 Project Application Period: March 16 at 8 a. m.

CST – May 4, 2026 at 5 p. m. CST Project Application Approvals: Innovate Alabama Board Meeting – June 29 New EDO Designations: May 5 – June 2, 2026 New EDO Designations Approvals: June 12, 2026 Project Application Round: June 29 at 8 a.

m. CST – July 17, 2026 at 5 p. m.

CST Approvals: August 6, 2026 (board meeting) Existing EDOs do not need to reapply for EDO Designation – refer to “Step 1” for additional guidance. incentives@innovatealabama.

org To create a flourishing ecosystem in Alabama where tech accelerators and businesses thrive, Innovate Alabama offers tax credits to qualifying economic development organizations (EDOs) to enable the EDOs to accomplish what they do best: provide the tools, resources, and opportunities that help entrepreneurs level up their companies.

The Innovating Alabama Act, found in Article 22, Chapter 10, Title 41, Code of Alabama (1975), creates an incentive mechanism to provide tax credits to EDOs for qualifying projects. establishes a tax credit program to support EDOs engaged in growing Alabama’s technology ecosystem.

Under the Act, taxpayers can contribute funds to qualifying EDOs and receive a dollar-for-dollar state tax credit, offsetting up to 50% of their state tax liability. Unused credits may be carried forward for up to five years.

The credit can be applied against the following state taxes: Income tax (individual and corporate) Financial institution excise tax Step 1 – Apply for EDO Designation An entity seeking to apply for tax credits must first be designated as a Local Economic Development Organization (LEDO) or a Statewide Economic Development Organization (SEDO) by Innovate Alabama.

This is done by completing the online application during an open round (see left menu bar for application dates) requesting to be designated as an Economic Development Organization (EDO), as those terms are defined in the Alabama Code.

Download Sample EDO Designation Request Form To qualify as an EDO, one must be: An Alabama entity operating as a non-profit, including, but not limited to, a municipality or County, an industrial board or authority, a chamber of commerce, or some other foundation. Charged with improving the state or a specific region within the state. Proven to have supported or participated in economic development efforts within Alabama.

While universities are not eligible to serve as Economic Development Organizations under the Innovate Alabama Tax Credit Program, they remain essential partners in Alabama’s innovation ecosystem. Innovate Alabama offers several alternative programs designed to directly engage higher education institutions in advancing innovation, entrepreneurship, and research collaboration.

You can find more about those programs here: Talent Pilot Program or our Network Program . To apply for EDO Designation: NEW EDOs (never been awarded EDO Designation): To apply for NEW EDO Designation, applicants must apply for EDO Designation during the “New EDO Designation” round (see left menu bar for application dates) before you are eligible to apply for a Project Application.

EXISTING EDOs (or previously awarded EDO Designation): If an applicant has previously received EDO Designation, you do not need to apply during the “New EDO Designation” round. The Existing EDO may upload its most recent EDO Designation letter at the time they submit Project Application (see left menu bar for project application dates).

The EDO Designation application will also require copies of the following documents: If an organization is exempt under I. R. C.

§ 501(​c)(3), its IRS Determination Letter Step 2 – Submit a Project Application Once the EDO Designation has been assigned, the EDO may submit an online application to Innovate Alabama to request a tax credit allocation. Tax credits can be used to support programs for either an “Innovative Company” or a “Tech Accelerator”. Applications will be open for online submission once the tax credit round begins.

The Tax Credit application is divided into two categories: To qualify as a Tech Accelerator, the qualifying project must be a for-profit startup business accelerator: Focused on commercializing research and technology, as well as business programs designed to support entrepreneurial ventures targeting underserved populations, such as minorities and rural communities.

This includes advanced manufacturing, aerospace, agriculture, bioscience, biotechnology, electronics, energy and natural resources, engineering, life sciences, and information technology industries, and any other innovative industry as determined by Innovate Alabama in its sole discretion.

To qualify as an Innovative Company, the organization must be a for-profit: Headquartered in a New Markets Tax Credit eligible area, in an innovative industry, employing fewer than 15 people, and having earned under $1 million in average gross revenue over the past 3 years; OR Headquartered in Alabama, in an innovative industry, employing fewer than 75 people, and at least 51% owned and controlled by women or African Americans who are U.S. citizens.

A Tax Credit Application must include a letter of support from your donor(s). They can either use their own letter or the provided template. All Tax Credit Applications must be notarized.

You can download the Notary Public form here. Step 3 – Application Approvals Project approvals will be announced during a subsequent Innovate Alabama Board Meeting. Regardless of the outcome of the application, each applicant will receive an email following the meeting to confirm the status of their project application.

Step 4 – Reserve Tax Credits (Donors) Tax credit reservations are processed through the Alabama Department of Revenue. For step by step instructions on how donors can claim their tax credits, visit www. revenue.

alabama. gov. Please refer to your funding agreement for information on required reports and due dates. Reporting templates and electronic submission links will be provided in your welcome email.

To ensure timely compliance, each EDO is responsible for tracking reporting deadlines. Innovate Alabama Tax Credit Recipients Innovate Alabama Tax Credit recipients include the following EDOs. This list will continue to grow as Innovate Alabama approves additional recipients in future rounds.

VIEW Tax Credit Recipients Please direct questions on the Innovate Alabama Tax Credit Program to incentives@innovatealabama. org . Frequently Asked Questions What is the Innovate Alabama Tax Credit Program?

The Innovate Alabama Tax Credit Program is a discretionary, application-based incentive program established by the Alabama Legislature and codified at Ala. Code § 41-10-840, et seq. The program is designed to create a thriving technology-based ecosystem throughout Alabama’s communities.

The program offers tax credits to economic development organizations to create programs that aid in the growth of small businesses and accelerators throughout the state. What is an “economic development organization”? In order to be eligible to apply to the Innovate Alabama Tax Credit Program, the applicant must be designated as an economic development organization (EDO).

An EDO is an Alabama entity not operating for a profit, and either (1) charged with improving a community or region of the state; or (2) charged with improving the state. In addition, the EDO must have a track record of supporting or participating in economic development efforts in Alabama.

In order to be designated as an EDO, the organization must first submit an EDO Designation Request application to Innovate Alabama, with relevant attachments to verify the representations in the EDO Designation request letter. It is recommended that organizations seeking to apply for EDO Designation review the applicable provisions of the Alabama Code to ensure full compliance and understanding of the relevant terms.

How can an EDO receive the Innovate Alabama tax credit? An EDO may submit an application for tax credits that would fund one of the eligible projects listed in Alabama Code § 41-10-842 . How can the EDO monetize the Innovate Alabama tax credit?

If an EDO is awarded credits, then it can transfer those credits to an applicable donor in exchange for cash. The donor would then be able to claim the tax credits, and the EDO would be able to undertake the eligible project after receiving the cash donation. What taxes can the Innovate Alabama tax credit offset?

The tax credit can offset up to 50% of a taxpayer’s liability for the following taxes: a. income tax (individual and corporate); b. financial institution excise tax; c.

insurance premium tax; or What types of projects are qualified? Qualifying projects typically involve activities that contribute to the growth and development of technology-focused startups or accelerator programs in Alabama’s tech ecosystem. The types of projects must meet the description provided in Alabama Code § 41-10-842(a) .

Can the tax credit be carried forward? Yes, taxpayers who receive the Innovate Alabama Tax Credit may carry it forward for up to five years. Can the tax credit be passed through to individual partners or members of a partnership or LLC?

Yes, if earned by a passthrough entity, the tax credit is not required to be taken at the entity level. Instead, it can be allocated to the entity’s partners or members, as applicable, in accordance with the entity’s operating agreement. See Alabama Code § 41-10-844 for additional information.

How can an EDO access their awarded tax credits? EDOs can access their tax credits through their log-in credentials at the My Alabama Tax Portal. Click here for more helpful details.

How does a Donor reserve their tax credits? Click here for more details on reserving Innovate Alabama Tax Credits. When does the Innovate Alabama Tax Credit Program sunset?

The program will sunset on July 31, 2028. Where should I direct questions about the Innovate Alabama Tax Credit Program? For any inquiries regarding the Innovate Alabama Tax Credit Program, please email incentives@innovatealabama.

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