A three-year tax exemption on energy costs is now available to Alabama agricultural producers—but only if you know it exists and act before the window closes.
Most Alabama manufacturers and agricultural producers don't realize that energy costs for certain farm operations just became tax-exempt under state law. If you operate a commercial greenhouse, pivot irrigation system, poultry house, or aquaculture aeration system, you may qualify for immediate savings on your utility bills—but the window to benefit is limited.
Senate Bill 159, signed into law, exempts natural gas and electricity used as fuel or energy in four specific agricultural facility types from Alabama's utility gross receipts tax and utility service use tax. In plain terms: the state is removing two layers of tax that normally apply to your energy bills.
The utility gross receipts tax is paid by the utility company but passed through to customers. The utility service use tax is paid directly by the consumer. Both are now waived for energy consumed in:
This is a direct reduction in your operating costs. You'll see the difference on your utility invoice.
If your business operates any of these four facility types and pays utility bills for energy used in their operation, you are eligible. This applies to small and mid-sized agricultural operations as well as larger producers. The exemption covers the energy itself—the fuel or power used to run the facility—not other utility services.
The exemption becomes effective September 1, 2026. However, this is a temporary provision. The amendatory language is set to expire on August 31, 2029—giving you a three-year window to benefit from this tax break.
After August 31, 2029, unless the law is extended, these exemptions will no longer apply. If you operate one of these facilities, you should plan now to take advantage of the savings while they're available.
Start by reviewing your current utility bills to identify which charges apply to the exempt facility types. When September 1, 2026 arrives, contact your utility provider and provide documentation that your facility qualifies under the law. You may need to submit proof of the type of operation and how the energy is being used.
Keep records of your facility type and energy use. If you're planning capital investments in greenhouses, irrigation systems, poultry operations, or aquaculture aeration, the tax savings should factor into your return-on-investment calculations through August 2029.
The legal citation for this provision is Section 1, §40-21-83, Alabama Code (pages 2–3, lines 50–58 of SB159).
For a detailed breakdown specific to your operation type, contact your industry association or local economic development office for a free resource guide on SB159's application.