Tax Reform

Taxes are a tool used to promote the common good. They provide the funding for education, child care, Medicaid, mental health care and other public infrastructure that improves everyone’s quality of life. But Alabama’s outdated tax structure fails to raise enough revenue to support these services, which holds our state back from realizing its full potential.

Alabama’s upside-down tax system also taxes many struggling families deeper into poverty. Low-income families pay twice the share of their income in state and local taxes on average that top earners do. Making that problem worse, Alabama is one of only three states with no tax break on groceries.

Arise has been a leading proponent of tax reform in Alabama for decades, and our analysis and advocacy were crucial in the enactment of a state income tax cut for families in poverty in 2006. Our research continues to show the range of benefits that Alabama would reap by untaxing groceries, ending large tax breaks for rich households and big corporations, and taking other steps to rebalance and modernize its tax system.

Featured Resources

Fact Sheet

What would an ideal plan to untax groceries in Alabama look like?

Several tax bills (including grocery tax cut bills) will be discussed this year in the Alabama Legislature. What makes a tax reform bill good for Alabamians? Here are four important factors to keep in mind: It provides a tax cut for families with low incomes (not just wealthy households). Alabama’s state sales tax on groceries [...]
Issues
Economic Opportunity, Budgets, Safety Net, Tax Reform
Date
April 10, 2023
Author
Alabama Arise
Fact Sheet

The federal income tax deduction is skewed and wrong for Alabama

Wealthy people don’t need a huge, skewed income tax break ‒ but Alabama gives them exactly that. This loophole, called the federal income tax (FIT) deduction, overwhelmingly benefits rich households. It’s an imbalanced tax giveaway that reduces funding for public schools. And it increases the state’s reliance on regressive revenue sources, like the sales tax [...]
Issue
Tax Reform
Date
December 15, 2022
Author
Carol Gundlach
Letters & Testimony

Alabama Arise, 51 partner groups urge U.S. senators to support Child Tax Credit, EITC improvements

The American Rescue Plan Act (ARPA) temporarily expanded the Child Tax Credit (CTC) for hundreds of thousands of Alabama children last year. The law also temporarily increased the maximum Earned Income Tax Credit (EITC) for workers without children and broadened the age range for EITC eligibility. Alabama Arise joined 51 partner organizations Tuesday in a [...]
Issues
Tax Reform, Economic Opportunity, Safety Net
Date
November 15, 2022
Author
Alabama Arise
Fact Sheet

A revenue-neutral plan to untax groceries in Alabama

Alabama Arise supports legislation that would end the state sales tax on groceries and over-the-counter (OTC) drugs and protect school funding. By capping the state income tax deduction for federal income taxes, the plan would bring in $520 million a year, the Legislative Services Agency (LSA) estimates. That would replace the revenue from ending the [...]
Issues
Budgets, Tax Reform
Date
August 18, 2022
Author
Carol Gundlach
Fact Sheet

Eliminating state grocery tax would make life better for Alabama families

Alabama’s sales tax on groceries is a cruel tax on survival, particularly in times of economic insecurity. It increases hunger rates and drives struggling Alabamians deeper into poverty. Two bills in the 2022 regular session – SB 43 by Sen. Andrew Jones, R-Centre, and HB 173 by Rep. Mike Holmes, R-Wetumpka – would end the [...]
Issue
Tax Reform
Date
January 25, 2022
Author
Carol Gundlach
Letters & Testimony

To strengthen the common good: Six principles for allocating Alabama’s ARPA funding

Introduction Dear Governor Ivey, One of the darkest years in recent memory has put Alabama’s families, communities, health system, businesses – and our leaders at all levels – to the test. Thank you for all your efforts to keep Alabamians safe and secure during this unprecedented emergency. Now that a post-COVID world is dawning, the [...]
Issues
Medicaid Expansion, Budgets, Criminal Justice, Health, Housing, Public Transportation, Safety Net, Tax Reform, Economic Opportunity, Coronavirus
Date
July 7, 2021
Author
Alabama Arise
Fact Sheet

Progressive tax changes would allow Alabama’s budgets to endure and rebuild after COVID-19

Alabamians are living through hard times right now. Thousands of people are sick. Many more are scared or out of work. Uncertainty is everywhere amid a pandemic with no clear timetable or end game. As more businesses close or cut back, as more people lose income, and as fewer of us go to the stores [...]
Issues
Coronavirus, Budgets, Tax Reform
Date
April 30, 2020
Author
Carol Gundlach
Fact Sheet

Unemployment insurance improvements, recovery rebates will help Alabamians hurt by COVID-19 pandemic

The coronavirus pandemic has caused an unprecedented increase in unemployment insurance claims nationally. And the story is the same in Alabama, where 74,056 UI claims were filed in the week ending Saturday, March 28. That’s easily a record high since 1987, the earliest year for which weekly data is available for Alabama. The number of [...]
Issues
Tax Reform, Economic Opportunity, Coronavirus, Safety Net
Date
April 1, 2020
Author
Dev Wakeley
Fact Sheet

Untax groceries and protect funding for Alabama’s public schools

The sales tax on groceries is a cruel tax on survival. It drives struggling people deeper into poverty. Here’s why Alabama should end this tax – and how to do it: Alabama is one of only three states with no tax break on groceries. The state grocery tax is 4%, equal to two weeks’ worth [...]
Issue
Tax Reform
Date
February 25, 2020
Author
Alabama Arise
Fact Sheet

Removing the FIT deduction would allow Alabama to untax groceries, expand Medicaid

Alabama's federal income tax (FIT) deduction provides a huge tax break for high-income individuals – but at what cost? $719 million to be exact. The FIT deduction is one big reason Alabama's tax system is upside down. For those who earn $30,000 a year, the deduction saves them about $27 on average. But for the [...]
Issues
Budgets, Health, Tax Reform, Medicaid Expansion
Date
April 15, 2019
Author
Alabama Arise
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Issue Expert

Carol Gundlach

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