Are R&D Tax Credits
Available in Alabama ?
No. While businesses in Alabama may still qualify for the Federal Research and Development (R&D) Tax Credit, the state of Alabama does not currently offer an R&D tax credit at the state level.
Why the Federal R&D Credit Still Matters
Even without a state-level incentive, companies in Alabama can still capture substantial value through the federal credit. First enacted in 1981, the Federal R&D Tax Credit remains one of the most powerful tools for businesses investing in innovation.
Provides billions in annual tax savings nationwide
Offers critical funding for hiring employees, expanding research, and scaling facilities.
Benefits thousands of companies across industries, from manufacturing and engineering to software development and life sciences.
Qualifying Research Activities
The four-part test that defines what counts as qualified research activities under
the R&D Tax Credit program
Purpose of the Research
The activity should develop or improve a business component, such as a product, process, software, formula, technique, or invention, by enhancing functionality, performance, reliability, or quality.
Resolving Uncertainty
The work must address technical uncertainties, such as determining the optimal design, method, or approach to achieve the desired outcome. The results should not be known in advance.
Systematic Experimentation
Eligible research must follow a structured experimentation process, including trial and error, modeling, simulation, or testing alternatives to reach the intended improvement.
Technological Basis
The activity must rely on hard sciences such as engineering, physical or biological sciences, or computer science. Artistic, social science, or routine data collection work does not qualify.
Why the R&D Tax Credit Matters ?
Since 1981, the R&D Tax Credit has helped businesses save billions in federal and state taxes. The credit enables companies to hire more staff, expand R&D, invest in facilities, and drive innovation. Thousands of businesses across multiple industries take advantage of this benefit each year.