Alabama InventionINDEX November 2025: 0.86% (D+ grade)

The InventionINDEX measures innovation output by comparing GDP growth with patent production growth. 

Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).

Alabama inventionINDEX Scores – Last 12 months

The historical data for the inventionINDEX over the past five years reveals a score that is high in volatility but maintains a respectable long-term average. Examining the 60-month period from November 2020 to November 2025, the index demonstrates a high degree of performance clustering around the ‘A’ and ‘B’ ranges, indicating generally strong underlying innovative activity. However, the recurring presence of lower scores, specifically the periodic drops to the 0.86% (D+) rating—observed in November 2025, November 2024, October 2022, and July 2023—suggests a persistent vulnerability to external or cyclical pressures that temporarily stifle innovation output. The overall consistency in achieving ‘A+’ ratings, often in consecutive months (as seen in early 2025), confirms a robust capability for peak performance.

A higher inventionINDEX score and corresponding ‘A’ grade generally translate into significant positive outcomes. An elevated score suggests a fertile environment for intellectual property creation and commercialization, which is a powerful driver of economic growth. Specifically, a sustained high rating attracts greater capital investment, particularly from venture capitalists and high-tech firms seeking proven innovation hubs. This success creates a virtuous cycle: increased investment fuels more research and development, fosters the creation of high-wage jobs in knowledge-based industries, and elevates the jurisdiction’s reputation as a center of excellence. The peak score observed in January 2024 at 2.15% (A+) exemplifies the potential for substantial innovation output when conditions are optimal.

Conversely, a lower score, particularly one dipping into the ‘C’ or ‘D’ ranges, carries significant negative implications for future economic prospects. A persistent decline signals a potential erosion of the underlying innovation infrastructure, whether due to reduced R&D funding, a “brain drain” of talent, or bureaucratic impediments to patenting and commercialization. The short-term result is often a loss of competitive edge against other jurisdictions. In the long term, low scores can deter both domestic and international investors, as the perceived risk associated with a lagging innovation ecosystem rises. This stagnation can lead to an over-reliance on mature, low-growth industries and a diminished capacity to adapt to technological shifts.

Comparing the recent period (2025) to the preceding full year (2024) highlights a fluctuating but generally stable pattern. The mean score for 2025 has included several A+ ratings, but the final score of 0.86% (D+) in November 2025 brings the current period’s performance into question, showing a strong susceptibility to steep monthly declines. This latest figure is a sharp retreat from the robust activity just a few months prior. Management of the inventionINDEX score must therefore focus not just on achieving intermittent peaks, but on mitigating these severe troughs to ensure a consistently favorable environment for innovation and maintain positive momentum, preventing the perception of instability from deterring crucial long-term investment.

Discussion:

In November, the Alabama inventionINDEX scored a negative sentiment which was lower than the previous year’s average and underperformed the downward trend for the year. This is similar to the prior 12 months, which experienced a slight downward trend. 

As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.

Learn More:

Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.

Swanson Reed’s Alabama office provides R&D tax credit consulting and advisory services to Birmingham, Montgomery, Mobile, Huntsville, Tuscaloosa, Hoover, Dothan, Auburn, Decatur and Madison.

Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.

Who We Are:

Swanson Reed is the largest Specialist R&D tax credit advisory firm in the United States. With offices nationwide, we are one of the only firms globally to exclusively provide R&D tax credit consulting services to our clients. We have been exclusively providing R&D tax credit claim preparation and audit compliance solutions for over 30 years. 

Swanson Reed hosts daily free webinars and provides free IRS CE and CPE credits for CPAs.  For more information please visit us at www.swansonreed.com/free-webinars or contact your usual Swanson Reed representative.