General Manager Brian Horak walks down an aisle at Post 60 Market in Emerson, Neb. Alabama's state grocery tax will fall from 3% to 2% on Monday as the result of a law passed in the spring. (Kevin Hardy/Stateline)
Alabama’s state grocery tax is scheduled to drop on Monday as a law passed last spring takes effect.
The state portion of the grocery tax will fall from 3% to 2%, the result of campaigning by both liberal and conservative groups.
“This is great news for the people of Alabama. The latest grocery tax reduction – the second in three years – will make it easier for every Alabamian to make ends meet, especially in this time of persistently high food prices,” said Robyn Hyden, executive director of Alabama Arise, a civil rights advocacy organization that has been at the forefront of efforts to reduce the tax.
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HB 386, sponsored by Rep. Danny Garrett, R-Trussville and passed during the 2025 legislative session, does not directly impact grocery taxes imposed by city or county governments, though the law allows local governments to cut those taxes if they wish. It forbids local governments from raising them further.
A message was sent to the Alabama Grocers Association seeking comment.
Most states exempt groceries from sales taxes. Alabama for years was one of a handful of states that fully taxed groceries, and had done so since the state first imposed sales taxes in 1939. State and local levies combined could raise the tax as high as 10% in some areas. Critics said the tax fell disproportionately on lower-income earners and added to food insecurity.
A family that spends $600 on groceries each month and paid a total 9% tax will see their tax on the groceries go from $54 a month to $48 a month, or from $648 a year to $576 a year.
Legislators for years resisted cutting the grocery tax, citing the potential impact it could have on the Education Trust Fund budget (ETF), which pays for most public education in the state. The ETF gets most state sales taxes; HB 386 was estimated to reduce revenue in the ETF by $121 million.
But a surplus of money in 2023 led lawmakers to push for a reduction in the grocery tax. HB 479, sponsored by Garrett, the chair of the House Ways and Means Education Committee and enacted in 2023, reduced the state grocery tax from 4%, the standard sales tax rate in the state, to 3%.
The bill opened the door for an additional reduction, but only if revenue in the ETF increased 3.5%. In the fall 2023, budget experts for the state forecasted tax receipts to increase by less than 2%.
Garrett, however, moved to reduce the tax last spring, saying a repeal of an income tax exemption on overtime wages would pay for the cut.
Even after reducing the state portion of the grocery tax bill in half, Alabama Arise is hoping for further reductions to eliminate the tax altogether.
“We continue to support our longstanding proposal to replace grocery tax revenue by capping or ending the state income tax deduction for federal income tax payments,” Hyden said. “Alabama is the only state to allow this full deduction, which overwhelmingly benefits the wealthiest households. Closing this skewed loophole would protect funding for public schools and ensure Alabama can afford to end the state sales tax on groceries forever.”
From Alabama Reflector Post Url: Visit
Author: Ralph Chapoco