Matt Brown | Oct 06 2026 14:44
Alabama farmers who operate poultry houses, pivot irrigation systems, commercial greenhouses, or commercial aquaculture aeration systems have a new tax exemption worth knowing about.
Beginning September 1, 2026, qualifying electricity and natural gas used in these operations can be exempt from Alabama’s Utility Gross Receipts Tax. The exemption is currently scheduled to run through August 31, 2029.
The important part is that the exemption does not happen automatically. Farmers have to apply for an STE-3 Utility Tax Certificate of Exemption from the Alabama Department of Revenue and then provide that certificate to their utility company. There is also a separate-metering rule that can matter quite a bit if the same meter serves both qualifying and nonqualifying uses.
Here is what Alabama farmers need to know.
Which Farm Operations Qualify?
The new exemption applies to electricity or natural gas used as fuel or energy in four specific agricultural uses:
- Poultry houses
- Pivot irrigation systems
- Commercial greenhouses
- Commercial aquaculture aeration systems
The key is the use of the electricity or natural gas. Simply operating a farm does not make the entire farm utility bill exempt.
Poultry Houses
For Alabama poultry growers, this is an especially important change.
Electricity and natural gas used as fuel or energy in poultry houses can qualify for the exemption. That can make the new law worth a closer look for growers with significant electricity or natural gas costs.
The new law also goes beyond Alabama’s previous language for poultry houses, which was limited to energy used for heating. The current exemption is written more broadly for electricity and natural gas used as fuel or energy in poultry houses.
ALDOR has not published a detailed list showing every piece of poultry-house equipment that qualifies. If one utility service powers several different uses, it is a good idea to look at the actual setup rather than assuming everything on the meter is exempt.
Pivot Irrigation Systems
Electricity or natural gas used in a pivot irrigation system can also qualify.
The wording here matters. The law specifically says “pivot irrigation systems.” It does not simply say all farm irrigation.
Metering can also become important if the same electric service powers the pivot along with other farm equipment or buildings.
Commercial Greenhouses
The exemption also applies to qualifying electricity and natural gas used in commercial greenhouses.
ALDOR’s current guidance does not spell out a detailed definition of a “commercial greenhouse.” For a greenhouse that is clearly part of a commercial farming operation, the answer may be fairly straightforward. Less common or mixed-use situations may need a closer review.
Commercial Aquaculture Aeration Systems
Commercial aquaculture aeration systems are also included.
For Alabama aquaculture operations, especially those with substantial electricity costs for aeration, this exemption may be meaningful.
One thing to keep in mind is that the law specifically refers to the aeration system. It does not say that every electrical use at an aquaculture operation is exempt.
Not Every Farm Utility Bill Will Qualify
This is probably the easiest part of the new exemption to misunderstand.
If you have a qualifying poultry house, irrigation system, greenhouse, or aquaculture aeration system, that does not automatically make all electricity or natural gas used on the farm exempt.
A house, office, shop, unrelated barn, or other nonqualifying use does not become exempt just because it is located on the same farm.
The law is also limited to electricity and natural gas. It does not create a general exemption for every type of fuel used in agriculture.
Electricity and natural gas used in the production of industrial hemp, hemp, or cannabis are specifically excluded.
Check Your Meters Before You Apply
For many farmers, this may be the most important practical part of the new rule.
ALDOR says that if one utility account serves both exempt and nonexempt uses, separate metering is required.
For example, say the same electric meter serves a poultry house and a farm shop. You should not assume the entire account can simply be treated as exempt because the poultry house qualifies.
Before applying, it makes sense to look at a few basic questions:
- What does each meter actually serve?
- Does the meter serve only the qualifying farm use?
- Does it also serve a shop, residence, barn, office, or other equipment?
- Is the utility account in the same name as the individual or business that will apply for the exemption?
That last question can matter on family farms. It is not unusual for a farm to operate through an LLC, partnership, or corporation while an older utility account is still in an individual owner’s name.
Those are the kinds of details that are much easier to straighten out before the exemption application is submitted.
How Do You Get the Alabama Farm Utility Tax Exemption?
The process starts with the Alabama Department of Revenue.
1. Figure Out Which Utility Use Qualifies
Start with the basics. Identify the poultry house, pivot irrigation system, commercial greenhouse, or commercial aquaculture aeration system that you believe qualifies.
Then look at the meter serving that equipment.
If the meter also serves something that does not qualify, the separate-metering requirement needs to be addressed.
2. Apply to the Alabama Department of Revenue
Farmers can currently apply electronically through My Alabama Taxes or use Form ST-EX-A3, Application for State Utility/Mobile Communication Services Tax Certificate of Exemption.
The application asks for information such as the applicant’s legal name, federal employer identification number, business location, type of business, the utility being purchased tax-free, the reason for the exemption, and information about the ownership of the business.
Depending on how the farm is organized, additional entity or ownership documents may also be required.
3. Receive Your STE-3
Once ALDOR approves the application, it issues the applicant a Form STE-3 Utility Tax Certificate of Exemption.
The certificate belongs to the person or business it was issued to and should only be used for qualifying purchases.
4. Give the STE-3 to Your Utility Company
After receiving the certificate, provide a properly completed copy to the electric or natural gas provider.
The certificate copy should include the provider’s name and address, the date it was provided, and the certificate holder’s signature and title.
If you have more than one qualifying utility provider, the rules allow the certificate holder to provide properly completed copies to its providers.
5. Keep Good Records
Do not send the certificate to the utility company and forget about it.
Alabama’s rules require the certificate holder to keep a list of the utility providers that received a copy of the STE-3.
It also makes sense to keep the application, certificate, utility information, and any supporting documents together with the farm’s other tax records.
When Is It Worth Getting Help?
For some farms, the exemption should be pretty straightforward.
One qualifying use, one meter, one operating entity, and one utility company makes for a much simpler situation.
Other farms may have a few more moving parts.
It may be worth getting help if:
- One meter serves both qualifying and nonqualifying uses.
- The utility account is in a different name from the farming business.
- Several LLCs, partnerships, corporations, or family members are involved.
- The farm has several locations or utility providers.
- You are not sure whether your particular equipment falls within one of the qualifying categories.
- You would like help preparing or submitting the STE-3 application.
The point is not to make the exemption more complicated than it needs to be. It is simply better to get the details right before the certificate is issued and given to the utility company.
Is the New Alabama Farm Utility Tax Exemption Worth Looking At?
If you operate poultry houses, pivot irrigation systems, commercial greenhouses, or commercial aquaculture aeration systems in Alabama, the answer is yes.
The exemption will not apply to every farm or every utility bill, but it is worth checking if your operation falls into one of the qualifying categories.
Start by looking at what your utility meters serve. From there, determine which account may qualify and whether your farm needs to make any changes before applying for the STE-3.
Under current law, the exemption is available through August 31, 2029.
If your farming operation may qualify, Kilgore, Brown & Brittain can help you work through the eligibility rules and the STE-3 process. We can also help identify potential issues involving meters, farm entities, or utility accounts and assist with preparing the application if needed.
Disclaimer
This article provides general educational information and is not intended as individualized tax or legal advice. Tax laws and administrative guidance can change, and each farming operation is different. Farmers and agricultural businesses should consult a qualified tax professional about how these rules apply to their specific situation.