The Employer Tax Credit must be precertified through My Alabama Taxes before an employer can claim the credit on their Alabama tax return. Precertification of this credit is a two-step process requiring taxpayers to first secure a credit reservation. Eligible employers may begin requesting reservations for tax year 2026 on January 5, 2026. Those with an approved reservation must then submit a credit claim at the end of the tax year and include detailed documentation substantiating their claims.

Prerequisites for submitting an Employer Tax Credit reservation through My Alabama Taxes:

• Taxpayer must be a qualifying employer who anticipates incurring eligible expenses throughout the year. Eligibility requirements can be found here.
• An active My Alabama Taxes account for the taxpayer who will utilize the credit. If you need assistance creating a My Alabama Taxes account or are unsure which account the credit will be applied to, email incentives@revenue.alabama.gov.

Procedures for filing an online Employer Tax Credit Reservation through My Alabama Taxes:

• Visit My Alabama Taxes and log in.
• Click on the Other Actions tab and select Reserve an Employer Tax Credit under Tax Incentives.
• Employer Information: Complete the required fields and select Next.
  • Note! If you make a rural or small business designation and you do not meet these criteria, your reservation request will be rejected, requiring a new submission. A map of qualifying rural (targeted) counties can be found here.
• Reservation Amount: Enter the amount of credit you wish to reserve and select Next.
  • Small Businesses (fewer than 25 employees): Eligible for a credit equal to 100 percent of eligible expenses, with a maximum of $600,000 annually.
  • Other Employers (25 or more employees): Eligible for a credit equal to 75 percent of eligible expenses, with a maximum of $600,000 annually.
• Review Submission: Review the information in full (and print a copy of your records), then select Submit.

What to expect after the reservation is submitted:

Once your reservation is processed, you will receive a letter from ALDOR notifying you of the amount of reservation approved.  At the close of the tax year, taxpayers with an approved reservation will be required to submit documentation to support the reserved credit amount through a credit claim. The credit awarded through a credit claim may be up to, but not exceeding, the reserved amount.

Should you have any questions or concerns, contact incentives@revenue.alabama.gov or 334-353-9789.