Alabama Bill to Add State Incentive for OZ Investment Goes to Governor

Friday, May 31, 2019 - 9:15am

Alabama legislation to give state taxpayers a capital gains tax reduction for certain opportunity zones (OZ) investments passed the state Senate and House of Representatives this week and is on the desk of Gov. Kay Ivey. H.B. 540 would allow a state capital gains tax reduction if the gains are invested in a qualified opportunity fund (QOF) that has at least 75 percent of its qualified OZ property in the state. The bill also includes a provision to allow the Alabama Department of Economic and Community Affairs to enter into agreements with QOFs to offer impact investment tax credits to investors in case the projects undertaken by the QOF don’t produce returns by the fifth year that were expected in the project agreement. There is a statewide cap of $50 million for credits, with a requirement that “extraordinary returns” are allocated back to the state.