Although an Alabama grocery tax reduction is now in place, Alabamians will only pay marginally less at the checkout counter.
This is due to the fact that the Act only decreases the state tax by 1% until 2023, while food goods will continue to be subject to local sales taxes.
The state may lower its portion of the grocery tax more next year, although this is not assured. Some taxpayers, though, can look forward to more help in the form of Alabama tax refund checks, which will begin to be distributed this fall.
Items That Are Still Subject to Alabama Grocery Tax
Only 13 states still tax groceries, including Alabama. Prior to September 1, the state levied a 4% sales tax on foodstuffs.
The new law decreases the tariff on selected foods to 3% until August 20, 2024. This means that for every $100 spent on food, buyers can save $1. However, not all items are eligible for the food tax break. Here are some things that are still subject to the 4% tax:
- Any prepared meals (for example, reheated pizza slices)
- Food for pets
- Supplements and vitamins
- Household Product (such as paper towels and laundry detergent)
- Shampoo, for example, is an example of a personal care item
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Grocery Tax Will Reduced by 1%
Another grocery tax cut in Alabama is possible in September 2024. If passed, the grocery tax will be reduced by another 1%, bringing the state’s food sales tax to 2%.
However, it is unclear whether this cut will be implemented. This is due to the fact that the reduction is contingent on tax revenue for the state’s Education Trust Fund.
The additional grocery tax cut will not take effect until the fund grows by at least 3.5% over the preceding fiscal year.
Even if the extra Alabama grocery tax drop goes into force in 2024, buyers will still have to pay municipal taxes on food goods.
Even with a 2% state grocery tax, Alabamians would pay the following amount in taxes in the highest-taxed cities:
- $9.50 off every $100 spent on groceries
- Each $1,000 spent on groceries saves you $95
- Roughly $895.28 per year (which is based on Kiplinger’s previously published average yearly grocery prices for middle-class households).
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