Lower Tax on Groceries Now in Effect

Date: August 02, 2023

The sales tax will be reduced from 4% to 3%

Alabama’s sales and use tax rates on food were reduced from 4% to 3% on Sept. 1.

For businesses, that means the September 2023 sales and use tax returns due in October will have a separate column where the qualified food items must be reported. The state sales and use tax rates will be further reduced to 2 percent on Sept. 1, 2024, if there is sufficient growth in the state Education Trust Fund.

Local governments can reduce their rate on food in 25 percent increments in any year when there is sufficient growth in their local General Fund.

Food has the same meaning as defined in 7 U.S.C. § 2011, for the federal Supplemental Nutrition Assistance Program (SNAP). SNAP-eligible food items generally include any food or food product for home consumption, except alcoholic beverages, tobacco, hot foods, or hot food products ready for immediate consumption. Click here for additional information on SNAP-eligible and ineligible items.

Related Content: Small Business News | Alabama

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