HB86ENGROSSED
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HB86
6YWGJ13-2
By Representative Collins
RFD: Ways and Means Education
First Read: 04-Feb-25
PFD: 24-Jan-25
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PFD: 24-Jan-25
A BILL
TO BE ENTITLED
AN ACT
Relating to rural health care; to provide for funding of
rural general acute care, critical access, and rural
emergency hospitals by creating the Rural Hospital Investment
Program; to establish the Rural Hospital Investment Program
Board to administer the program; to provide for state income,
excise, premium, and utility tax credits in exchange for
donations to rural general acute care, critical access, and
rural emergency hospitals; and to provide for coordination
with the Alabama Department of Revenue.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1.This act, the purpose of which is to
generate additional funds for eligible rural general acute
care, critical access, and rural emergency hospitals to
strengthen their financial viability, shall be known and may
be cited as the "Rural Hospital Investment Act of 2025."
Section 2.For the purposes of this act, the following
terms have the following meanings:
(1) BOARD. The Rural Hospital Investment Program
Board.
(2) DEPARTMENT. The Alabama Department of Revenue.
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(2) DEPARTMENT. The Alabama Department of Revenue.
(3) ELIGIBLE RURAL HOSPITAL. A hospital that meets the
requirements set out in Section 4.
(4) ELIGIBLE TAXES. Financial institution excise tax,
income tax, insurance premium tax, and utility tax.
(5) FINANCIAL INSTITUTION EXCISE TAX. The taxes levied
and collected pursuant to Chapter 16 of Title 40, Code of
Alabama 1975.
(6) INCOME TAX. The taxes levied and collected
pursuant to Chapter 18 of Title 40, Code of Alabama 1975.
(7) INSURANCE PREMIUM TAX. The taxes levied and
collected pursuant to Chapter 4A of Title 27, Code of Alabama
1975.
(8) PROGRAM. The Rural Hospital Investment Program.
(9) QUALIFIED DONATION. An unrestricted transfer of
funds for eligible rural hospitals.
(10) QUALIFIED DONOR. Any person, third party, or
organization that makes a qualified donation to an eligible
rural hospital.
(11) RURAL HOSPITAL. A rural general acute care,
rural emergency, or critical access hospital determined to be
located in a rural area as set out in Section 4(2).
(12) TAX YEAR. The calendar year for which annual
income is reported to the State of Alabama by a person that
makes a qualified donation.
(13) THIRD PARTY. An entity classified as a
tax-exempt nonprofit organization by the Internal Revenue
Service that participates in soliciting, administering, or
managing qualified donations for eligible rural hospitals.
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managing qualified donations for eligible rural hospitals.
(14) UTILITY TAX. The taxes levied and collected
pursuant to Sections 40-21-82 through 40-21-107, Code of
Alabama 1975.
Section 3. (a) The Rural Hospital Investment Program
Board is established within the Office of the State Treasurer
to oversee the development and operation of the Rural Hospital
Investment Program. The board shall consist of the following
members:
(1) The Governor, or his or her designee.
(2) The State Treasurer, or his or her designee.
(3) The Commissioner of Revenue, or his or her
designee.
(4) The President Pro Tempore of the Senate, or his or
her designee.
(5) The Speaker of the House of Representatives, or his
or her designee.
(6) Two representatives of the Alabama Hospital
Association, appointed by the association.
(7) Two representatives of business, appointed by the
Business Council of Alabama.
(b) Members shall be appointed within 30 days of the
effective date of this act.
(c)(1) The appointing authorities for the members
appointed pursuant to subdivisions (a)(6) and (a)(7) shal1
each appoint one initial member to the board for a term of two
years and one initial member to the board for a term of four
years.
(2) Members subsequently appointed to the board
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(2) Members subsequently appointed to the board
pursuant to subdivisions (a)(6) and (a)(7) shall each serve
for a term of four years.
(3) A vacancy on the board of a representative
appointed pursuant to subdivisions (a)(6) and (a)(7) shall be
filled by the respective appointing authority before the next
scheduled meeting of the board and the appointee shall serve
for the remainder of the unexpired term.
(d) Designees or appointees to the board shall be
inclusive and reflect the racial, gender, geographic, urban,
rural, and economic diversity of the state.
(e)(1) No later than two months after the effective
date of this act, the Governor, or his or her designee, shall
call the first meeting of the board, at which meeting the
members shall elect a chair.
(2) The board shall meet at least once a year in
Montgomery, Alabama, but thereafter shall meet as necessary to
conduct its business.
(3) A quorum for a meeting of the board shall be five
members.
(4) The board may meet by electronic means, so long as
there is a quorum of participating members.
(5) The legislative members of the board shall be
entitled to their legislative compensation, per diem, and
travel expenses for each day they attend a meeting of the
board pursuant to Section 49 of the Constitution of Alabama of
2022.
(6) The nonlegislative members of the board shall serve
without compensation but may be reimbursed for necessary
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without compensation but may be reimbursed for necessary
expenses in attending meetings of the board pursuant to the
policies of his or her respective appointing authority.
Section 4. In order to receive qualified donations as
an eligible rural hospital under the program, a health care
institution shall meet all of the following requirements:
(1) Be a rural general acute care hospital, a rural
emergency hospital, or a critical access hospital licensed by
the Alabama Department of Public Health pursuant to Section
22-21-22, Code of Alabama 1975.
(2) Be in a location considered to be a rural area
under the federal Centers for Medicare & Medicaid Services
eligibility definition of "rural" as verified through the
Federal Office of Rural Health Policy in the Rural Health
Information website supported by the federal Health Resources
and Services Administration.
(3) Provide hospital services to both Medicare and
Medicaid participants without discrimination.
(4) Provide hospital services to indigent patients,
regardless of ability to pay.
(5) Be in compliance with all reports and audits
required by law.
(6) Submit to the board a written five-year plan that
describes the financial viability and stability of the
hospital, with a plan detailing how it would use qualified
donations under the program and update the written plan five
years after the initial plan is submitted and every five years
thereafter.
Section 5. The board shall do all of the following:
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Section 5. The board shall do all of the following:
(1) No later than November 1 of each year, determine if
a hospital is an eligible rural hospital pursuant to Section
4.
(2) No later than December 1 of each year, develop a
list of eligible rural hospitals and include each hospital's
demonstrated financial need as demonstrated in the hospital's
written five-year plan and submit the list, including each
hospital's demonstrated financial need, to the Alabama
Department of Revenue.
(3) No later than December 1 each year, publish on its
website or on the department website the list of rural
hospitals, including each hospital's demonstrated financial
need, eligible to receive qualified donations during the next
tax year.
Section 6. (a) An eligible rural hospital shall only
use qualified donations for the purpose of providing health
care to the residents of the area which it serves, which may
include operational expenditures and expenditures for
maintenance, capital upgrades, and improvements.
(b) An eligible rural hospital may retain a person,
third party, or an organization to solicit or manage the
qualified donations it receives for a percentage fee of the
qualified donations solicited or managed, but total fees shall
not exceed five percent of the total amount of qualified
donations received during a calendar year.
(c) Any third party that participates in soliciting,
advertising, or managing donations shall provide the complete
list of eligible rural hospitals, including demonstrated
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list of eligible rural hospitals, including demonstrated
financial needs as published by the department to any
potential donor regardless of whether a third party has a
relationship or agreement with an eligible rural hospital.
(d) Starting in March of tax year 2027, an eligible
rural hospital shall file a report with the board, on a form
to be provided by the board that shall include all of the
following information:
(1) A schedule of each qualifying donation received
during the preceding tax year, which includes the amount,
identifies the qualified donors, and describes how the
qualified donation was or is planned to be spent.
(2) A schedule of payments made to any person, third
party, or organization during the preceding tax year for the
purpose of soliciting or managing the qualified donations
received.
(e) An eligible rural hospital shall report all
donations received to the department within 30 days of the
receipt of that donation.
Section 7. Annually, the board and the department shall
jointly prepare a report that, at a minimum, includes all
qualified donations reported by eligible rural hospitals and
all tax credits claimed and approved pursuant to this act for
the preceding tax year. This report shall be provided to the
Legislature by the fifth day of the next regular session.
Section 8. (a) A taxpayer may claim a tax credit to
offset eligible taxes for each qualified donation as provided
in this section.
(1) For a donor who is a single individual, a head of
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(1) For a donor who is a single individual, a head of
household, or married, filing a separate return: an amount
equal to 100 percent of the qualified donations to the
taxpayer made during the tax year for which the credit is
claimed, not to exceed fifteen thousand dollars ($15,000).
(2) For a donor who is married, filing a joint return:
100 percent of the qualified donations to the taxpayer made
during the tax year for which the credit is claimed, not to
exceed thirty thousand dollars ($30,000).
(3) a. For a qualified donor that is taxed as an
electing pass-through entity under Section 40-18-24.4, Code of
Alabama 1975: 100 percent of the qualified donations to the
taxpayer made during the tax year for which the credit is
claimed, not to exceed four hundred fifty thousand dollars
($450,000).
b. The tax credit shall be taken by the taxpayer on a
pro rata basis according to the percentage of ownership in the
entity or the limitations set forth in this section, whichever
is less. In the case of a donor that is taxed as a corporation
under the Internal Revenue Code, an amount equal to 100
percent or 75 percent of the corporation's income, excise, or
insurance premium tax, not to exceed the amount of the
corporation's income, excise, or insurance premium tax
liability, whichever is less, with a contribution limit each
tax year of five hundred thousand dollars ($500,000).
(4) a. A credit for utility taxes may be claimed in an
amount equal to 100 percent of total qualified donations
during the taxable year for which the credit is claimed. In
order to claim a credit against utility tax payments under
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order to claim a credit against utility tax payments under
this section, a taxpayer must have a utility tax direct pay
permit from the department pursuant to its requirements. A
taxpayer shall provide a copy of the utility tax direct pay
permit to each utility provider from whom the taxpayer
receives services. A taxpayer holding a direct pay permit
shall notify the department of each qualified donation
pursuant to the department's procedures. To the extent credits
are available, the department shall reserve credits for a
taxpayer and provide written confirmation thereof.
b. Upon receipt of a qualified donation, the recipient
shall submit to the department certification of the donation
received from a taxpayer under this subdivision pursuant to
procedures established by the department within 30 business
days after receipt of each donation. Upon receipt of the
certification from the recipient, the department shall provide
written confirmation to the taxpayer within 30 business days
that the reserved credits of the taxpayer in the amounts of
qualified donations actually made and not yet claimed are
eligible to be utilized on its monthly utility tax direct pay
return. A taxpayer may not utilize a credit against the
utility tax until such time as the department provides the
notification described in the previous sentence.
(b)(1) The total amount of the tax credit for a tax
year may not exceed the taxpayer's tax liability or, for
financial institutions, the state portion of the taxpayer's
financial institution excise tax liability.
(2) Any unused tax credit may be carried forward for up
to three years following the qualified donation but shall not
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to three years following the qualified donation but shall not
be transferable.
(c)(1) The tax credits may be claimed beginning January
1, 2026, for the 2026 tax year.
(2) Any unused tax credit may be carried forward for up
to three years following the qualified donations but shall not
be transferable.
Section 9. (a) The statewide annual aggregate of the
tax credit allowed for qualified donations shall not exceed
the following amounts:
(1) Twenty million dollars ($20,000,000) in the tax
year ending December 31, 2026.
(2) Twenty-five million dollars ($25,000,000) in the
tax year ending December 31, 2027.
(3) Thirty million dollars ($30,000,000) for all
subsequent tax years.
(b) No more than seven hundred fifty thousand dollars
($750,000) shall be contributed to any eligible rural hospital
in the tax year ending December 31, 2026; one million dollars
($1,000,000) for the tax year ending on December 31, 2027; and
one million two hundred fifty thousand dollars ($1,250,000)
each year thereafter, to be limited by the annual aggregate
amount applicable in subsection (a).
(c) In the event a qualified donor desires to make a
contribution to an individual eligible rural hospital that has
received the maximum amount of contributions for that year,
the donor shall be provided, upon request to the board, the
list of eligible rural hospitals and demonstrated financial
needs that are still eligible to receive contributions that
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needs that are still eligible to receive contributions that
year.
(d) In the event a qualified donor desires to make a
contribution to an individual eligible rural hospital that
exceeds the maximum amount allowed for that year, the
department shall not deny such desired contribution but shall
approve the proportional amount of the desired contribution up
to the eligible rural hospital's maximum amount of
contributions for that year and any remainder shall be
attributed to an eligible rural hospital with high financial
need that has not yet received the maximum amount of
contributions for that year.
(e) In the event that a qualified donor desires to make
a contribution to an unspecified or undesignated rural
hospital, such donation shall be attributed to the eligible
rural hospital with a high demonstrated financial need that
has not yet received the maximum amount of contributions for
that year, regardless of whether a third party has a
relationship or agreement with any eligible rural hospital.
(f) The department shall preapprove each qualified
donation for compliance with each applicable limit in
subsections (a) and (b).
Section 10. (a) The department shall adopt rules
pursuant to the Alabama Administrative Procedure Act on or
before January 1, 2026, as necessary to administer and
implement this act. The rules shall provide for all of the
following:
(1) That the tax credits will not reduce the
distribution for the Alabama Special Mental Health Fund.
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distribution for the Alabama Special Mental Health Fund.
(2) That the tax credits shall be awarded based on the
order in which the credits are requested.
(b) The department shall prescribe the method by which
the tax credits are to be issued to eligible taxpayers.
Section 11. (a) The State Treasurer shall adopt rules,
on or before January 1, 2026, pursuant to the Alabama
Administrative Procedure Act necessary to implement the
responsibilities of the board and this act.
(b) The board may retain an Alabama company to
publicize the program, including the development of
promotional and information literature and a program website
for use by eligible rural hospitals and qualified donors.
Section 12. The tax credits created by this act may
also qualify for federal income tax credits or deductions, but
it is not intended for any qualified donation under this act
to automatically qualify for any federal income tax credit or
deduction.
Section 13. (a) The tax credits provided by this act
may be claimed beginning January 1, 2026, for the 2026 tax
year.
(b) Except as provided in Section 8(b)(2), no tax
credit may be claimed after tax year 2028.
Section 14. This act shall become effective
immediately.
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immediately.
House of Representatives
Read for the first time and referred
to the House of Representatives
committee on Ways and Means
Education
................04-Feb-25
Read for the second time and placed
on the calendar:
1 amendment
................03-Apr-25
Read for the third time and passed
as amended
Yeas 103
Nays 0
Abstains 0
................08-Apr-25
John Treadwell
Clerk
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