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Real and personal property used for business, commercial, industrial, or manufacturing purposes in Alabama is defined as Class 2 property and assessed at 20% fair market value. The property (ad valorem) tax rate per $1,000 of assessed valuation is as follows:
| Ad Valorem Tax Rates | |||||||||
| Municipality | State Mills | + | County Mills | + | School Mills | + | Local Mills | = | Total Mills |
| Bayou La Batre | 6.5 | + | 20.5 | + | 21.5 | + | 5.0 | = | 53.5 |
| Chickasaw | 6.5 | + | 20.5 | + | 21.5 | + | 4.5 | = | 53.0 |
| Citronelle | 6.5 | + | 20.5 | + | 21.5 | + | 6.0 | = | 54.5 |
| Creola | 6.5 | + | 20.5 | + | 21.5 | + | 0.0 | = | 48.5 |
| Dauphin Island | 6.5 | + | 20.5 | + | 21.5 | + | 5.0 | = | 53.5 |
| Mt. Vernon | 6.5 | + | 20.5 | + | 21.5 | + | 0.0 | = | 48.5 |
| Saraland | 6.5 | + | 20.5 | + | 21.5 | + | 3.5 | = | 52.0 |
| Satsuma | 6.5 | + | 20.5 | + | 21.5 | + | 5.0 | = | 53.5 |
| Mobile | 6.5 | + | 20.5 | + | 29.5 | + | 7.0 | = | 63.5 |
| Prichard | 6.5 | + | 20.5 | + | 29.5 | + | 5.0 | = | 61.5 |
| Unincorporated | 6.5 | + | 20.5 | + | 21.5 | + | 0.0 | = | 48.5 |
All real and personal property in Alabama subject to property tax is valued at fair and reasonable market value. Real property improvements are usually valued using the cost approach to arrive at a replacement cost new, then depreciated based on the condition of the property plus any obsolescence suffered by the property. Land is usually valued using the market or sales comparison approach reflecting what similar property is selling for. A value per square foot or front foot is usually assigned.
Personal property is valued by using the cost approach to arrive at a replacement cost new, then depreciated based on condition and obsolescence. Depreciation (derived from tables developed by the Department of Revenue) is then applied to the replacement cost. For more information regarding ad valorem taxes please visit the following website for the "State of Alabama Property Tax Index": www.ador.state.al.us/advalorem/index.html
Sales & Use Tax
There are three types of sales & use tax in Alabama. They are general, machinery, and automotive. The applicable rates for the various municipalities in Mobile County are as follows:
| General Sales & Use Tax Rates | |||||||
| Municipality | State Tax % | + | County Tax % | + | Local Tax % | = | Total Tax % |
| Bayou La Batre | 4.00 | + | 1.50 | + | 3.50 | = | 9.00 |
| Chickasaw | 4.00 | + | 1.50 | + | 4.00 | = | 9.50 |
| Citronelle | 4.00 | + | 1.50 | + | 3.00 | = | 8.50 |
| Creola | 4.00 | + | 1.50 | + | 3.00 | = | 8.50 |
| Dauphin Island | 4.00 | + | 1.50 | + | 2.00 | = | 7.50 |
| Mt. Vernon | 4.00 | + | 1.50 | + | 4.00 | = | 9.50 |
| Saraland | 4.00 | + | 1.50 | + | 3.00 | = | 8.50 |
| Satsuma | 4.00 | + | 1.50 | + | 3.00 | = | 8.50 |
| Mobile | 4.00 | + | 1.00 | + | 4.00 | = | 9.00 |
| Prichard | 4.00 | + | 1.00 | + | 5.00 | = | 10.00 |
| Unincorporated | 4.00 | + | 1.50 | + | 0.00 | = | 5.50 |
| Machinery Sales & Use Tax Rates | |||||||
| Municipality | State Tax % | + | County Tax % | + | Local Tax % | = | Total Tax % |
| Bayou La Batre | 1.50 | + | 1.50 | + | 1.00 | = | 4.00 |
| Chickasaw | 1.50 | + | 1.50 | + | 1.50 | = | 4.50 |
| Citronelle | 1.50 | + | 1.50 | + | 0.75 | = | 3.75 |
| Creola | 1.50 | + | 1.50 | + | 1.50 | = | 4.50 |
| Dauphin Island | 1.50 | + | 1.50 | + | 3.00 | = | 6.00 |
| Mt. Vernon | 1.50 | + | 1.50 | + | 4.00 | = | 7.00 |
| Saraland | 1.50 | + | 1.50 | + | 1.00 | = | 4.00 |
| Satsuma | 1.50 | + | 1.50 | + | 2.00 | = | 5.00 |
| Mobile | 1.50 | + | 1.00 | + | 2.00 | = | 4.50 |
| Prichard | 1.50 | + | 1.00 | + | 0.75 | = | 3.25 |
| Unincorporated | 1.50 | + | 1.50 | + | 0.00 | = | 3.00 |
| Automotive Sales & Use Tax Rates | |||||||
| Municipality | State Tax % | + | County Tax % | + | Local Tax % | = | Total Tax % |
| Bayou La Batre | 2.00 | + | 1.00 | + | 1.00 | = | 4.00 |
| Chickasaw | 2.00 | + | 1.00 | + | 1.50 | = | 4.50 |
| Citronelle | 2.00 | + | 1.00 | + | 0.75 | = | 3.75 |
| Creola | 2.00 | + | 1.00 | + | 1.50 | = | 4.50 |
| Dauphin Island | 2.00 | + | 1.00 | + | 2.00 | = | 5.00 |
| Mt. Vernon | 2.00 | + | 1.00 | + | 0.50 | = | 3.50 |
| Saraland | 2.00 | + | 1.00 | + | 1.50 | = | 4.50 |
| Satsuma | 2.00 | + | 1.00 | + | 2.00 | = | 5.00 |
| Mobile | 2.00 | + | 0.50 | + | 2.00 | = | 4.50 |
| Prichard | 2.00 | + | 0.50 | + | 0.75 | = | 3.25 |
| Unincorporated | 2.00 | + | 1.50 | + | 0.00 | = | 3.50 |
The use tax rates are the same as the sales tax and gross receipts tax rates. For more information regarding sales & use taxes please visit the following website for the "State of Alabama Sales & Use Tax Index": www.ador.state.al.us/salestax/index.html
Corporate Income Tax
Corporations pay Alabama income tax based on their net taxable income derived from business conducted within the state. Currently the maximum corporate tax rate is 6.5%. Deductions are allowed for Federal income tax paid or accrued. At this time, the Alabama income tax return is filed on a separate corporate basis for business conducted in Alabama, and a copy of the federal consolidated return must be attached if the taxpayer is part of a consolidated group. For more information regarding corporate income tax please visit the following website: www.ador.state.al.us/incometax/corporate_index.html.Alabama Business Privilege Tax
The Business Privilege Tax is a tax on the net worth, in Alabama, of corporations, limited liability entities and disregarded entities. This tax replaces the former franchise tax that was declared unconstitutional in March 1999. The tax accrues as of January 1 of every taxable year.However, in the case of a taxpayer organized during the year, qualifying during the year, or doing business in Alabama for the first time, the tax accrues as of the date of organization, qualification, or beginning to do business.
The rate is based on the ability to pay and is determined by the entity’s federal taxable income in Alabama. The rate ranges from $.25 to $1.75 for each $1,000 of net worth in Alabama. The minimum privilege tax is $100; the maximum privilege tax is $15,000 per year after Year 2000 (maximum tax for Year 2000 is $15,250), except for financial institutions, insurance companies, public utilities, which have a maximum privilege tax liability of $3 million and real estate investment trusts which have a $500,000 cap. An electing family limited liability entity owes a $500 business privilege tax. For more information regarding the Alabama Privilege Tax please visit the following website: www.ador.state.al.us/incometax/bus_priv_tx/ITbusprivindex.htm
Unemployment Compensation Tax
Employers pay unemployment compensation tax under an experience rating plan on the first $8,000 in wages paid to any employee during the calendar year. New employer experience rating is 2.7%.When the operating fund is above the statutory level, the rates are 0.5% to 5.4%, with the employee paying nothing.
When the operating fund is below the statutory level, rates may be adjusted, limited to a 25% increase in the tax, up to a 0.7% maximum increase in the rate. For more information regarding unemployment compensation tax please visit the following website: dir.alabama.gov/docs/dept_type.aspx?id=2
Workers’ Compensation Insurance
The final version of the Workers' Compensation Reform bill (Act 92-537) was signed by Governor Hunt on Tuesday, May 19, 1992. Many important provisions were included in the legislation. These changes should hold down costs and, hopefully, future rate increases while speedily delivering appropriately high levels of benefits to injured employees.
The following is a brief summary of some of the most important provisions of the Workers' Compensation Reform Act of 1992.
Medical Fee Schedule Act 92-537 limited physician fees to the rate paid by the largest health insurer in Alabama (Blue Cross/Blue Shield). The initial medical fee schedule was based on PMD (Blue Cross/Blue Shield Preferred Medical Doctor rate) plus 7.5% and is updated annually based on the consumer price index. This major breakthrough in capping physician fees for workers' compensation cases should translate into significant savings for employers in Alabama.
Ombudsman/Mediation Program The Ombudsman Program was established to mediate disputed workers' compensation claims that occur after January 1, 1993. Mediation is not mandatory but will be encouraged through this program, which is designed to assist all parties. Use of attorneys by any party is strictly optional and settlements reached under this process are not required to be court approved. For the first time under Alabama law, disputed workers' compensation cases can now be resolved without going to court.
Utilization Review/Bill Screening The utilization review/bill screening is a voluntary provision. Insurance carriers, self-insured employers and workers' compensation insurers' trusts can conduct a utilization review and bill screening of medical and hospital charges in workers' compensation cases. Utilization review and bill screening is critical now that physician and hospital reimbursement levels have been capped.
Vocational Disability When an injured worker returns to work at a wage equal to or greater than the preinjury wage, he is not entitled to any vocational disability. If the injured worker loses his job within 300 weeks from the date of the injury, the worker may petition within two years for a vocational disability. These conditions are set out in the Act.
Burden of Proof The Act provides that decisions under this law will be based on the "preponderance of the evidence" except in injuries that have resulted from gradual deterioration or cumulative stress disorders, which shall require "clear and convincing" evidence.
Fraud Provision This provision allows an employer to terminate an employee who files a fraudulent claim under the workers' compensation net. There is also a provision for denial of benefits under the act for fraudulent claims.
Average Weekly Wage/Fringe Benefits The Act establishes that wages are earnings subject to federal income taxation and fringe benefits. Fringe benefits are defined only to include the employer's portion of health, life, and disability insurance premiums. These are to be added to the wage computation only when they are not continued during the period of disability.
Medical Subrogation The Act provides that an employer shall be allowed to subrogate medical and vocational benefits expenses recovered in a third party lawsuit.
Drug Testing It is provided that an employee can be disqualified from benefits if an accident is caused by the injured employee's impairment by the use of illegal drugs, and allows a drug test to be performed after an accident. Compensation can also be denied if an injured employee refuses to submit to a drug test after an accident.
Misrepresentation on Application Denial of benefits is also provided if an employee knowingly and falsely misrepresents his or her physical or mental condition and that condition is aggravated or reinjured.
Stress Claims The legislation limits claims for mental stress or disorders to those that are produced or proximately caused by some physical injury to the body. This language was included to prevent the flood of stress-related workers' compensation claims, which has been experienced by other states such as California.
Miscellaneous Provisions The legislation also contains other positive provisions. These include an "employer's bill of rights" requiring insurance companies to notify employers before cases are settled; a set-off provision for recovery of workers' compensation benefits against other forms of benefits; limitations on discovery, including depositions and interrogatories, which will decrease legal costs when cases go to trial; and a complete overhaul and upgrade of the Workers' Compensation Division of the Department of Industrial Relations to more fully serve Alabama's employers and injured employees.
For more information regarding workers’ compensation please visit the following website: dir.alabama.gov/docs/dept_type.aspx?id=3.
