Gov. Kay Ivey signs exemption of business privilege tax, saving small employers $23M annually

Gov. Kay Ivey on Wednesday signed into law House Bill 391, which eliminates the state’s minimum business privilege tax levied on small employers.

The bill, sponsored by State Rep. Steve Clouse (R-Ozark) and State Sen. Tom Butler (R-Madison), provides relief to more than 230,000 small businesses.

The law cuts the $100 minimum business privilege tax to $50 beginning in tax year 2023. Once the law goes entirely into effect in 2024, small businesses will be completely exempt from the state’s minimum business privilege tax.

According to the governor’s office, the exemption is projected to save Alabama small businesses an estimated $23 million annually once fully implemented.

In a statement, Ivey extended gratitude to the tax exemption’s sponsors for ushering the bill through the legislative process.

“Alabama’s small businesses are the soul of our economy, and as long as I am your governor, I will continue to be a champion for these hardworking men and women,” declared Ivey in a release. “We are providing real relief to our small businesses. I commend Chairman Clouse and Senator Butler for their leadership and the Alabama Legislature for their work to support our small businesses. This will go a long way in providing support for some 230,000 small businesses for years to come.”

The Alabama Business Privilege Tax presently levies a minimum of $100 annually on corporations, limited liability entities and other businesses in the state. The governor’s office noted that the tax will remain due every registered year until the entity is legally dissolved.