Getting a project off the ground is about the bottom line. At Red Rock Realty, we talk to developers daily who balance vision with viability, asking the real-world questions: Where should we build? What makes this location worth the risk? Are there tools that actually move the needle?
In Alabama, the answer to that last one is a firm yes.
Between state-backed tax incentives, community-focused credits, and local support programs, Alabama is creating an investment environment in which developers can confidently break ground. And our professionals are breaking down how these incentives work, and how they’re helping developers turn big ideas into real returns.
The Economic Impact of Alabama’s Tax Incentives
Alabama has long recognized that attracting private-sector investment is critical for statewide growth. In 2015, the state enacted the Alabama Jobs Act—a performance-based incentive package designed to stimulate job creation and capital investment. The results have been impressive. By the end of 2021, projects supported by the Alabama Jobs Act had generated more than $17 billion in capital investments and created over 34,000 jobs across the state.
These outcomes aren’t accidental. The Alabama Jobs Act operates on a “pay-as-you-perform” basis, meaning companies only receive incentives after they’ve delivered on their promises. This accountability structure guarantees that taxpayer dollars are spent wisely while giving businesses the encouragement they need to expand.
Fast-forward to 2025, and Alabama has taken things further by launching the Alabama Development Fund. This initiative funnels a portion of future sales and property taxes from economic development projects into rural infrastructure improvements and global trade outreach, without raising taxes or reducing state funding for other programs. It’s a win-win: smart reinvestment that strengthens local economies while supporting long-term growth.
Why These Incentives Matter to Developers in Alabama
If you’re a developer in Alabama or considering becoming one, these programs are more than great headlines. They’re a real financial advantage that can influence your project’s bottom line from the very start.
Investment Support that Reduces Risk
The Alabama Jobs Act remains one of the Southeast’s most developer-friendly incentive programs. Developers whose projects qualify can benefit from:
- A 1.5% investment credit against state income tax for up to 10 years
- A 3% annual cash rebate on new payroll
- Enhanced incentives for high-wage or high-tech job creation
These offerings improve ROI and reduce up-front risks, especially for larger-scale or multi-phase developments.
How Developer Projects Qualify
To access these benefits, developers must meet specific criteria outlined in the Alabama Jobs Act. These generally include those that involve a minimum new capital investment threshold, create a set number of new jobs, and are approved by the Alabama Department of Commerce and local governing authorities.
Additionally, developers must enter into a project agreement that clearly defines the scope, performance benchmarks, and delivery timeframes. Once those benchmarks are met, incentives begin to flow.
Expanding Community-Driven Incentives
Commercial development doesn’t happen in isolation; it thrives when the surrounding community grows with it. That’s why Alabama created the Growing Alabama Act, a unique program that empowers developers and businesses to support local economic growth while receiving tax benefits in return.
At its core, this program offers tax credits to businesses contributing to approved local economic development organizations (EDOs). These funds are then used by the EDOs to support projects such as industrial parks, workforce training programs, broadband expansion, or public infrastructure.
What do developers get out of it? When you make cash contributions to the pre-approved EODs, you’ll receive a state income tax credit of 100% of your contribution. These credits can be used over a five-year period, making them flexible and strategic.
What Makes This Program a Smart Move For Developers?
Unlike traditional incentives that flow after job creation or capital investment, the Growing Alabama Act allows developers to proactively influence and invest in the areas surrounding their projects, which can pay off in the short and long term.
- Infrastructure Upgrades: Help accelerate road, utility, or broadband improvements near your development site.
- Workforce Development: Support training initiatives that make sure skilled labor is available for your project or future tenants.
- Site Readiness: Partner with local EODs to prepare land for development, which can shorten your construction timeline.
- Community Relations: Demonstrate a commitment to local growth, improving public perception, and supporting your project.
Moreover, with annual funding caps increasing to $35 million by 2028, developers have more room than ever to participate. And because projects are often tied to regional development goals, your contributions could unlock additional local incentives, including infrastructure partnerships and fast-track permitting.
Fueling Innovation and Technology Development
If your development projects intersect with innovation districts, research parks, or technology corridors, the Innovating Alabama Tax Credit can be a game-changer.
Introduced in 2023, this $25 million fund encourages investment in early-stage Alabama-based tech companies and startups. For developers, this opens the door to:
- Tech-focused tenant recruitment
- Partnerships with growing startups
- Increased long-term property value through association with innovation hubs
Historic Reuse & Revitalization Opportunities
Birmingham’s architectural legacy is one of its greatest assets—and one of its most underutilized. From vintage warehouses in the Parkside District to century-old storefronts in Avondale, the city is packed with historic properties that are full of character but need modernization. That’s where Alabama’s Historic Rehabilitation Tax Credit becomes a major advantage.
This program offers a 25% tax credit on qualified rehabilitation expenses for income-producing properties listed on the National Register of Historic Places or eligible for local historic designation. The goal? To make it more financially feasible for developers to restore and reimagine these buildings rather than tear them down or leave them behind.
What Counts as “Qualified Rehabilitation?”
Eligible expenses include things like:
- Structural repairs and stabilization
- Roofing, masonry, and window restoration
- Upgrades to electrical, HVAC, and plumbing systems
- ADA compliance improvements and fire protection
- Interior refinishing that retains historic character
Keep in mind that this program is competitive—the Alabama Historical Commission reviews applications and is subject to annual funding caps. But, the potential upside is significant, especially when combined with federal historic credits, which offer an additional 20% credit for qualifying projects.
Local Tools & Custom Incentives
Finally, many Alabama cities, including Birmingham, offer localized incentives that can stack with state programs. These local tools can be essential in bridging the financial gaps and making projects more viable.
Examples include:
- Sales & Use Tax Abatements: Reduced taxes on construction materials and equipment.
- Property Tax Reductions: Especially helpful for long-term ROI and portfolio growth
- Permit & Fee Waivers: Saves time and money in the early planning stages.
- Infrastructure Support: Includes utilities, road improvements, or drainage enhancements tied to your site.
- Fast-Track Permitting: Helps you avoid costly delays and stay on schedule.
Bringing it Back to Birmingham: Red Rock Realty’s View
At Red Rock Realty, we work with commercial clients daily who want to take advantage of these strategic incentives. From helping investors identify the most viable sites to connecting developers with local officials and economic development partners, we understand how to navigate Alabama’s incentive landscape to maximize your opportunity.
Birmingham is a city with momentum. It’s got a diverse economy, a growing population, and a real hunger for smart, sustainable development. With the help of Alabama’s tax incentives, we’re seeing that momentum turn into action. Office spaces, mixed-use developments, industrial facilities—they’re not just being planned, they’re being built. And the future looks bright for those ready to be part of it.
Let’s Build What’s Next, Together
Whether you’re eyeing your next big commercial venture or just exploring what’s possible in Alabama’s incentive-rich landscape, Red Rock Realty is here to guide the way. Let’s talk about your vision and how Alabama’s development tax credits can help make it a reality.