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Corporate Income Filing Requirements

  • Corporate Income Filing Requirements

All corporations and entities taxed as corporations for federal income tax purposes that are doing business in Alabama or deriving income from sources within Alabama, including income from property located in Alabama and on every corporation licensed or qualified to transact business in Alabama are required to file an Alabama Corporate income tax return.

Alabama’s Corporate Tax rate is six and one-half percent (6.5%) of the corporation’s Alabama taxable income.

A corporation has nexus in Alabama if the company has nexus under traditional constitutional tests, such as physical presence, in addition Alabama Code § 40-18-31.2 creates the factor presence nexus standard for business activity in the state to determine nexus for business income tax, business privilege tax and financial institution excise tax.  The section stipulates that the threshold amounts may be adjusted periodically consistent with the Consumer Price Index.

A corporation is deemed to have “substantial nexus” for the tax period in which they exceed the following thresholds for Alabama:

For tax years beginning on or after January 1, 2022:
$60,000 of property,
$60,000 of payroll,
$596,000 of sales, or
25% of the total property, total payroll, or total sales.

Electronic Filing Mandate

Corporations with assets of $5 million or more at the end of the corporation’s taxable year are mandated to e-file all Alabama Corporate Income Tax Returns, for that tax year and all subsequent tax years.

If a tax return preparer prepares 25 or more acceptable, original corporate or partnership income tax returns using tax preparation software in a calendar year, then for that calendar year and for each subsequent calendar year thereafter, all acceptable corporate and or partnership income tax return prepared by that preparer must be filed using electronic technology, as defined in the “Electronic Tax Return Filing Act,” as codified in Chapter 30 of Title 40, Code of Alabama 1975.

For more information see Revenue Rule 810-3-39-.12 Alabama Requirements for Mandatory E-File of Original Corporate Income Tax Returns.