Alabama will reduce its state grocery tax once again next month thanks to bipartisan legislation enacted earlier this year. This reduction will make it easier for every family across Alabama to make ends meet.

Alabama Arise staff members were proud to participate in a ceremonial bill signing event that Gov. Kay Ivey held for the legislation at the State Capitol in Montgomery on Thursday. Ivey officially signed the bill into law in May.

Official event photos from the Governor’s Office are available here.

An important step forward for tax justice

HB 386, sponsored by Rep. Danny Garrett, R-Trussville, will reduce the state sales tax on groceries from 3% to 2% beginning on Sept. 1. The law also will give cities and counties more flexibility to reduce local grocery taxes if they choose. The grocery tax reduction will be Alabama’s second in three years, building on a 2023 law reducing the tax from 4% to 3%.

“Reducing the grocery tax is especially critical in this time of persistently high food prices,” Alabama Arise executive director Robyn Hyden said. “The grocery tax drives many families deeper into poverty, and Alabama Arise remains committed to the goal of eliminating it entirely.”

Untaxing groceries has been one of Arise members’ top advocacy priorities for decades. The grocery tax is a major driver of the state’s upside-down tax system, which forces Alabamians with low and moderate incomes to pay a higher share of their incomes in state and local taxes than the wealthiest households. Hyden said she was thankful for the years of work that current and former lawmakers put in to make the recent grocery tax reductions possible.

“Arise appreciates Rep. Danny Garrett and Sens. Andrew Jones and Arthur Orr for guiding HB 386 through the Legislature, and Gov. Kay Ivey for signing it,” she said. “We’re thankful for the unanimous legislative support on the bill this year. And we’re grateful for former Rep. John Knight, former Sen. Hank Sanders, Sen. Merika Coleman, Reps. Laura Hall, Penni McClammy and Mary Moore, and so many other legislators whose determined work over so many years laid the groundwork for this progress.”

Finish the job: Arise’s ongoing advocacy to untax groceries

Alabama is one of only 10 states still taxing groceries. Arise has worked with the state’s Joint Study Commission on Grocery Taxation in recent years to explore paths to eliminate the rest of the state sales tax on groceries in a sustainable and responsible way. Arise is open to many options to replace grocery tax revenue, Hyden said.

One plan that the organization strongly supports, she said, is a proposal to replace grocery tax revenue by capping or ending the state income tax deduction for federal income tax payments. Alabama is the only state to allow this full deduction, which overwhelmingly benefits the wealthiest households.

“It is important to ensure grocery tax elimination doesn’t harm our children’s education in the long term,” Hyden said. “Closing the skewed federal income tax deduction loophole would protect funding for public schools and ensure Alabama can afford to end the state sales tax on groceries forever.”