Do You Qualify For The Alabama Tax Credit? Here’s What You Need To Know

Have you heard of the Alabama Storm Shelter Tax Credit Act? In conjunction with the Alabama Department of Revenue, Alabama Emergency Management Agency has developed provisions for the Alabama Tax Credit, which directly benefits those affected by tornadoes and extreme weather. 

AEMA’s responsibility is to collect an annual information report filed by the taxpayer, which reflects the costs for construction, acquisition, or installation of the qualified storm shelter at the primary residence. They’ll also collect additional information as required by the AEMA so that AEMA can issue a credit certificate to the taxpayer.

We’re going to go over everything you need to know about the Alabama Storm Shelter Tax Credit Act, but if you have questions about documentation for the storm shelter tax credit, contact Alabama Emergency Management Agency at (205) 280-2200. For questions about processing the storm shelter tax credit, contact the Alabama Department of Revenue Individual Income Tax at (334) 242-1170.

Everything You Need To Know About The Alabama Storm Shelter Tax Credit Act

What Is The Amount of The Tax Credit?

First, what is the tax credit, and is it worth it to apply? The Alabama Tax Credit will equal up to $3,000, or 50% of the total cost of the construction, acquisition, and installation of the qualified storm shelter at the primary residence, whichever is less.

This total cost of the tax credit won’t include any expenses reimbursed or expected to be reimbursed by any other reimbursements, grants, or other government subsidies or incentives. In other words, if you’re already getting help to pay for shelter, this tax credit won’t apply to you. Here are a few additional things to keep in mind:

• The tax credit may not decrease a taxpayer’s tax liability to less than zero.
• Suppose the tax liability of the taxpayer is less than the tax credit issued. In that case, the taxpayer may only utilize the amount of the credit that reduces the taxpayer liability to zero.
• The statewide tax credit is limited to a collective amount for all taxpayers of two million dollars ($2,000,000) annually.

Who Qualifies For The Alabama Tax Credit?

If you are an Alabama taxpayer who incurs costs for the construction, acquisition, or installation of a qualified storm shelter at their primary residence in the state of Alabama, then you are eligible for the income tax credit for the storm shelter you install this year.

What Documentation Do I Need?

Here are the three things you need:

• Shelter/safe room specification sheet with engineer seal dated 2021 or later
• Proof of primary residence (County property tax record)
• Proof of shelter acquisition/installation cost (an invoice with a zero balance)

What Storm Shelters Qualify?

Your shelter must meet FEMA P-320 (March 2021), FEMA P-361 (April 2021), and ICC 500 (2020) standards and be installed on/after January 1, 2022.

If you would like to verify your storm shelter meets the most recent FEMA requirements – FEMA P-320 (March 2021), FEMA P-361 (April 2021), and ICC 500 (2020) – before purchasing a shelter, you can send your complete set of engineered drawings to sheltertaxcredit@ema.alabama.gov.

How To Apply For The Alabama Tax Credit

Install a Qualified Storm Shelter 

Ensure that the storm shelter you’re installing is at your primary residence and meets or exceeds the most recent Federal Emergency Management Agency minimum criteria for designing, constructing, and operating residential storm shelters and safe rooms. Check FEMA P-320, March 2021, for more details.

Gather The Required Documents

You’ll need to gather proof of the cost of construction and installation of your qualified storm shelter at your primary residence. Make sure that the applicant applying for the credit lives at the primary residence.

Submit Your Documents

You, the taxpayer, must then file your documentation with the Alabama Emergency Management Agency.

Receive Tax Credit Certificate

Once your documents are verified, the Alabama Emergency Management Agency will issue you a tax credit certificate.

File Your Tax Credit With Your State

You can now file your tax credit certificate with their state income tax return.

Key Takeaways

• Only eligible taxpayers who pay for the costs of construction and installation of a qualified shelter at their primary residence in the state of Alabama will be able to apply for an income tax credit for the storm shelter.
• The credit will only equal $3,000 or 50% of the total cost of building and installing the shelter (whichever is less).
• The total costs for qualification of the tax credit exclude any costs reimbursed or expected to be reimbursed by other grants or government subsidies, or incentives.
• The statewide tax credit is limited to a collective amount for all taxpayers of two million dollars ($2,000,000) annually.
• The taxpayer must file an annual informational report in a manner given by the Alabama Emergency Management Agency, which includes information reflecting the costs for construction, acquisition, or installation of the qualified storm shelter at the primary residence, along with additional information as required by the Alabama Emergency Management Agency.
• Tax credit certificates will be first-come, first-served until the annual cap is met.
• The tax credits allowed will be effective January 1, 2022, for the 2022 tax year and will continue through the 2025 tax year unless continued by an act of the Legislature.

After reaching the annual cap, all eligible taxpayers with applications awaiting approval or submitted will be notified, by AEMA, that there will be no additional tax credits approvals during that tax year. However, the taxpayers will be allowed to seek a tax credit certificate in the next tax year, subject to the limitations of the annual cap.

We Build the Best Storm Shelters in Alabama

Valley Storm Shelters is a leading designer and manufacturer of storms shelters, and we are proud to be installing our high-quality shelters across Alabama. No matter where you live in Alabama, we can help you get the best shelter on the market. Our shelters are constructed to withstand 300 miles per hour ground speed winds, equivalent to an EF-5 tornado. They’ve also been tested by the Texas Tech Wind Science and Engineering Research Center. In addition, as a producer member of the American Tornado Shelter Association, you can trust that our aboveground shelters will hold up when extreme weather strikes. 

Before you purchase a storm shelter, look around and do your research. Compare shelter companies, and make sure you check out our video demonstrations. We stand behind our shelters and think you’ll see precisely why we’re America’s top manufacturer.