Alabama: The Yellowhammer State

In terms of area, Alabama is the 30th largest state with an area of ​​over 135,000 km², much of which is covered with forest. According to ehuacom, the region around Montgomery and Selma offers a particularly fertile alluvial soil. In the south lies the Gulf of Mexico, into which the largest river, the Alabama River, flows. The Gulf of Mexico is also responsible for the sandy coastal plain that stretches from south to west Alabama. The border states are Florida to the southeast, Georgia to the east, Tennessee to the north, and Mississippi to the west.

Located in the southeastern part of the country, the fastest growing region in the USA, Alabama not only offers its 4.8 million inhabitants many advantages, but also companies. A low-cost environment, business-friendly policies, successful vocational training programs, a skilled workforce and good infrastructure read like a letter of invitation for entrepreneurs.

TOP 5 PLACEMENT IN THE “BEST STATES FOR DOING BUSINESS”

For the past six years, Alabama has finished in the top five in Area Development magazine’s Best State for Doing Business rankings. In addition to the aforementioned reasons, low taxes are another plus point. The state has succeeded in creating a business climate in which companies can flourish and innovate. Alabama has many skilled workers, especially in the various areas of production, whether it’s airplanes, rockets and missiles or hand-made furniture.

However, Alabama should not be reduced to just the manufacturing industry. Among other things, the fourth largest research park in the world is based, as well as seven high-performing research universities such as the University of Alabama at Birmingham and proven business incubators in the state.

EXCELLENT ECONOMIC DYNAMICS

Alabama top states in terms of economic dynamism. This emerges from research by State Policy Reports, which analyzed the key economic performances of the first quarter of 2021. For Alabama, a score of 1.31 ranks eighth nationally (average of 0). The index combines the metrics of personal income growth, employment growth and population growth as economic vitality.

Alabama Governor Kay Ivey is pleased with the result. According to him, the basis for this was created in recent years, in which the company’s growth was promoted. MP Bill Poole would like to continue to strengthen competitiveness through good cooperation and speaks above all of the areas of research, innovation, technology and strengthening entrepreneurship.

POPULAR DESTINATION FOR FOREIGN DIRECT INVESTMENT

In recent years, many well-known international companies such as Mercedes-Benz, Airbus and Toyota have invested in setting up production facilities in Alabama. In 2016, foreign direct investments totaled $1.5 billion. A large proportion of this amount resulted from the area of ​​production. The investors are mainly German, Japanese and South Korean companies.

Entire industries, such as the automotive industry, were built in Alabama largely through foreign investment. A total of 38,000 Albamians work in the automotive industry, the vast majority in foreign-owned companies.

EXPORT MACHINE IS GAINING MOMENTUM

Exports are also developing very positively and recorded growth of 57% between 2009 and 2014 to a total of 19.5 billion dollars. Exports from Alabama are shipped about 200 miles each year. The most important destination country is Canada, but Germany also occupies one of the top places. The most important export category is motor vehicles and parts.

ALABAMA INCOME TAX

Alabama charges an income tax of 2-5% depending on income. In addition, federal income taxes are payable.

ALABAMA CORPORATE INCOME TAX

Alabama charges a 6.5% corporate income tax. In addition, federal corporation tax is payable.

SALES TAX IN ALABAMA

There is no sales tax or Value Added Tax (VAT) in the USA based on the European model. Instead, in the United States, states, counties, and municipalities levy a local sales tax on the sale of products (but not services).

Sales tax rate in Alabama

The sales tax in Alabama is 4% at the state level. Municipalities or districts charge an average of 5.22% sales tax. Combined, an average of 9.22% is due.

Alabama Nexus Laws & Sales Tax

Learn more about the Economic Nexus Laws in the context of Sales Tax here.

Effective Date

October 1, 2018

Included Transactions

Total retail sales of tangible personal property shipped to the US state. Sales made through a registered marketplace agent are not included, but sales made through a non-collecting marketplace are included.

Treatment of tax-exempt transactions

Exempted sales (excluding wholesale sales) are included in the threshold. However, exempt services are not.

Reason

Sales only

Sales/Transactions Threshold

$250,000

Evaluation period

The threshold applies to sales from the previous calendar year

Extra information

  • Registration Requirements: Alabama did not specify how quickly a remote business must register once it crosses the Economic Nexus Threshold.
  • Remote sellers with Economic Nexus who elect to participate in the state’s Simplified Sellers Use Tax (SSUT) program will be required to collect and remit taxes on sales into Alabama effective October 1, 2019. For more information, see Simplified Sellers Use Tax Usage FAQ.
  • Alabama sales and use tax advice

Alabama Marketplace Sellers & Sales Tax

Learn more about Marketplace seller registration requirements

Effective date by the marketplace broker:

January 1, 2019

Economic Nexus Threshold:

More than $250,000 in sales in Alabama in the previous calendar year. When calculating the threshold:

  • Remote sellers should include direct sales and sales through a non-collecting marketplace
  • Marketplace intermediaries should include all sales made through the marketplace, including sales by related parties and marketplace sellers
  • Marketplace sellers should exclude sales made through a bulk marketplace

Registration requirements:

  • Remote Multichannel Sellers : You must register and collect Alabama sales tax on sales not taxed by a Marketplace Agent once you cross the Economic Nexus Threshold.
  • Remote Marketplace Sellers: You do not need to register with the US state even if you have crossed the economic nexus threshold. Contact the Alabama Department of Revenue (DOR) for more information.
  • In-State Multichannel Sellers: You must register with the Alabama DOR and collect taxes on sales that are not taxed by a marketplace intermediary.
  • State of America Marketplace Vendors: You are not required to register for a sales/use tax account, but should apply for an exemption certificate from the State of Alabama(The in-state seller must have the exemption certificate to purchase items for resale tax-free.) Contact the Alabama DOR for more information.

Alabama Location Map