How to Complete and File Alabama Form PPT: Net Worth, Rates, and Deadlines

Alabama Form PPT is the annual business privilege tax return for S-corporations, limited liability entities, and disregarded entities that do business in Alabama or are registered under Alabama law. The tax is not tied to income. You calculate it by applying a rate set by your entity’s taxable income to your Alabama net worth. Calendar-year filers owe the return on March 15, and for taxable years beginning after December 31, 2023, any entity whose privilege tax would be $100 or less owes nothing and files nothing.¹

Who Has to File Form PPT

Form PPT is the pass-through and disregarded-entity return. S-corporations, LLCs, LLPs, LPs, and single-member LLCs treated as disregarded entities for federal purposes all use it.² If your entity is taxed as a C-corporation, you file Form CPT instead.³ The filing obligation covers both Alabama entities and foreign entities authorized to do business in the state.¹

Single-Member LLCs Have a Special Rule

If a disregarded entity’s owner is itself subject to Alabama business privilege tax (another LLC, for example, or an S-corporation), the disregarded entity’s assets and liabilities are folded into the owner’s net worth, and the disregarded entity reports its own net worth as zero. If the owner is an individual, a general partnership, or another entity not subject to the privilege tax, the disregarded entity computes its own net worth and files its own Form PPT.⁴

The $100 Exemption

For taxable years beginning after December 31, 2023, entities with a calculated privilege tax of $100 or less owe no tax and are not required to file.¹ A low-activity startup with minimal net worth may skip the return entirely. If you’re not sure your liability lands at or under $100, run the numbers before you decide not to file.

What to Have on Hand Before You Start

Federal Employer Identification Number (FEIN), which goes in field 3b
Alabama BPT account number for field 3d (this is your Department of Revenue account number, not your Secretary of State entity number)
NAICS code for field 3l (the six-digit federal industry code, available at census.gov)
Balance sheet as of the last day of your determination period, which for most entities ends on the last day of the tax year immediately preceding the current taxable year
Prior-year federal return, which you’ll use to identify the taxable income figure that sets your rate

The legal name on Form PPT must match your registration with the Alabama Secretary of State exactly. A mismatch can delay processing.⁵

Calculating Alabama Net Worth

Net worth is the core figure on the return, and the calculation differs by entity type. The end result is a single dollar amount representing the net worth attributable to Alabama.

S-Corporations

Start with issued capital stock plus additional paid-in capital (Line 1) and retained earnings (Line 2). Neither can be less than zero, and you cannot reduce capital stock for treasury stock. Add related-party debt that exceeds the sum of Lines 1 and 2 (Line 3), then add any compensation above $500,000 per shareholder paid to direct or indirect shareholders during the determination period (Line 4). The total is your S-corporation net worth.³

LLCs, LLPs, and LPs

Begin with total partner or member capital accounts (Line 6), which cannot be less than zero. Add compensation or distributions above $500,000 per partner or member (Line 7) and related-party debt exceeding the Line 6 amount (Line 8). The total is your LLE net worth.³

Disregarded Entities Filing Separately

Enter the amount by which your assets exceed your liabilities (Line 12), but not less than zero. Add related-party debt exceeding that amount (Line 13) and any compensation above $500,000 paid to the owner (Line 14).³

If You Operate in More Than One State

You do not owe tax on your full net worth. You owe tax on the Alabama portion. For taxable years beginning on or after January 1, 2021, Alabama apportions using a single sales factor.⁶ Multiply your total net worth by that ratio to get your Alabama net worth.

Finding Your Rate and Computing the Tax

The rate is graduated, but it’s set by your entity’s taxable income, not by your net worth. Your taxable income points you to a rate, and you apply that rate to your Alabama net worth.⁷

Less than $1 of taxable income: $0.25 per $1,000 of net worth
$1 to $199,999: $1.00 per $1,000
$200,000 to $499,999: $1.25 per $1,000
$500,000 to $2,499,999: $1.50 per $1,000
$2,500,000 or more: $1.75 per $1,000

An entity that broke even or ran a loss still owes tax, calculated at the lowest bracket. Take your Alabama net worth, divide by 1,000, and multiply by the applicable rate to get your tax.¹

The statutory minimum is $100, though the exemption for taxable years beginning after December 31, 2023 relieves entities at or below that figure. The maximum for most entities is $15,000 per year.¹

When Form PPT Is Due

Calendar-year filers owe Form PPT on March 15. S-corporations, LLCs, LLPs, LPs, and disregarded entities all follow their corresponding federal income tax due date, which for most pass-through entities is the 15th day of the third month after the close of the tax year.⁸ Payment of the full tax is due on that original due date even if you get an extension to file.³

Alabama grants an automatic filing extension when you have an extension of the same length on your corresponding federal return. There is no separate state extension form to submit. The extension applies only to filing, not to payment; interest and penalties can accrue on any tax not paid by the original due date.⁹

Initial Returns for New Entities

A first-time filer follows a different clock. The initial business privilege tax return is due two and a half months after the entity is incorporated or organized in Alabama, or two and a half months after a foreign entity qualifies with the Alabama Secretary of State to do business in the state.¹⁰

How to File and Pay

The Department of Revenue’s My Alabama Taxes (MAT) portal is the primary method. You log in, enter your return data, confirm the tax, and authorize an electronic bank transfer. Keep the confirmation the system generates.

Paper filers use one of two addresses depending on whether a check is enclosed:

No payment: Alabama Department of Revenue, Business Privilege Tax Section, P.O. Box 327431, Montgomery, AL 36132-7431
With payment: Alabama Department of Revenue, Business Privilege Tax Section, P.O. Box 327320, Montgomery, AL 36132-7320, and include Form BPT-V as the payment voucher

Mailing a check to the no-payment address is a common cause of processing delays. Send checks to the payment address with Form BPT-V.³

What Happens If You File or Pay Late

Unpaid privilege tax accrues interest at 7 percent per year, calculated daily. Divide 7 percent by 365, multiply by the number of days late, and multiply by the unpaid tax. The Department sets this rate quarterly, so verify the current rate before you calculate.¹¹

A separate failure-to-pay penalty can reach 25 percent of the unpaid tax. The consequences extend beyond dollars. If the return goes unfiled, the Alabama Secretary of State may administratively dissolve a domestic entity or revoke a foreign entity’s authority to do business in the state. Restoring good standing then requires additional filings and fees on top of the tax owed.

1
Alabama Legislature. Alabama Code Title 40, Chapter 14A, Article 2, Section 40-14A-22 – Levy and Amount of Tax
2
Alabama Department of Revenue. Alabama Business Privilege Tax
3
Alabama Department of Revenue. Alabama Form PPT Business Privilege Tax Instructions
4
Alabama Legislature. Alabama Code Title 40 Section 40-14A-23
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Alabama Department of Revenue. Alabama Business Privilege Tax Return
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Alabama Administrative Code. Rule 810-27-1-.09 – Apportionment Formula
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Alabama Department of Revenue. Business Privilege Tax
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Alabama Department of Revenue. Due Dates
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Alabama State Legislature. Alabama Administrative Code Rule 810-2-8-.06 – Extension of Time for Filing
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Alabama Department of Revenue. What Is an Initial Return? When Is It Due?
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Alabama Department of Revenue. Quarterly Interest Rates