The new reduction in grocery tax across Alabama goes into effect on Sept. 1.
Back in May, the Alabama Senate passed HB 386 in an effort to expedite the reduction of the state sales tax on groceries from 3 percent to 2 percent. The bill also allows city and county governments more flexibility to lower their own grocery taxes. Those effects will officially take hold on Sept. 1.
Alabama is currently one of just 10 states in the country that taxes groceries and had taxed groceries at a 4 percent rate from 1939 until 2023. The Alabama Legislature passed similar legislation in 2023 that reduced the tax to 3 percent but also required a growth in the Education Trust Fund (ETF) of at least 3.5 percent to reach that rate. HB 386 bypasses any requirements and drops the tax rate to 2 percent…