A buried provision in Alabama's HB393 could change which restaurants qualify for state tax incentives—and most owners don't know it yet.
Most Alabama restaurant owners don't realize that a provision in HB393, signed into law, could quietly change whether their business qualifies for state tax abatements, investment credits, or grants. The culprit: an update to how the state classifies businesses by industry code.
Here's what's happening. For decades, Alabama's tax incentive programs have used the 2012 North American Industry Classification System (NAICS) to define which businesses count as "industrial or research enterprises" eligible for tax breaks. HB393 updates that reference to the 2022 NAICS system across all relevant state statutes. That sounds technical, but it has real consequences.
Any restaurant or food-service business whose NAICS code changed between 2012 and 2022 could be affected. The NAICS system is revised every five years to reflect how industries evolve—new business models, technology, and operational categories emerge. A restaurant that qualified for an abatement under the old code might not under the new one, or vice versa. Similarly, a food-service operation that didn't qualify before might now.
The change applies to tax abatement programs, investment tax credits, and state grants tied to these industry classifications. If your business has been grandfathered into an existing incentive program, this may not immediately affect you. But if you're applying for a new abatement, credit, or grant—or if your current agreement comes up for renewal—this update will determine your eligibility.
The provision is found in HB393, Section §40-9B-3(a)(14), on page 10, lines 269-273. It mandates that all references to NAICS codes in Alabama's tax incentive statutes now point to the 2022 classification system instead of 2012. This affects multiple programs across state law, not just one.
The effective date is June 1, 2026. That gives businesses and state agencies time to prepare, but it's not far away. If you're considering applying for an abatement or credit, or if you're in the middle of negotiating one, the timing matters.
First, identify your current NAICS code under both the 2012 and 2022 systems. The U.S. Census Bureau publishes both versions online. If your code changed, research whether the new classification affects your eligibility for any state incentive programs you currently use or might want to pursue.
If you're in the middle of an abatement agreement or grant application, ask your state contact or economic development representative how the June 1, 2026 effective date applies to your situation. Some agreements may have transition rules; others may not.
This is not an emergency, but it is worth a conversation with your accountant or business advisor before 2026 arrives—especially if tax incentives are part of your financial planning.
For a detailed, business-specific guide to how NAICS code changes may apply to your operation, contact your state restaurant association or local economic development office.