A new law reducing Alabama’s state sales tax on groceries from 3% to 2% will take effect on Monday after being enacted in May. HB 386 by Rep. Danny Garrett, R-Trussville, also will give cities and counties more flexibility to reduce local grocery taxes if they choose.
Alabama Arise executive director Robyn Hyden released the following statement Wednesday about the law’s implementation and what should happen next:
“This is great news for the people of Alabama. The latest grocery tax reduction – the second in three years – will make it easier for every Alabamian to make ends meet, especially in this time of persistently high food prices. Everyone in our state will benefit from this law, and people who are struggling to make ends meet will benefit the most of all.
“The state grocery tax reduction from 4% to 3% in 2023 was an essential first step toward tax justice in Alabama, and this year’s reduction to 2% continues that momentum. HB 386 is another important step toward righting the wrongs of our 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.
“Alabama 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 into law. We’re thankful for the unanimous legislative support on this bill this year. And we’re grateful for former Rep. John Knight, former Sen. Hank Sanders, 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 continued progress.
What should happen next
“The grocery tax is a cruel tax on survival. It drives many families deeper into poverty, and Arise remains committed to the goal of eliminating it entirely. Arise members from every corner of our state have advocated relentlessly for decades for Alabama to untax groceries. And our work will continue until the state grocery tax is a thing of the past.
“Alabama is one of only 10 states still taxing groceries, and we must remove our state from that shameful list. We also must ensure grocery tax elimination doesn’t harm our children’s education in the long term. Education Trust Fund revenues are strong enough now to reduce the grocery tax without causing severe harm to school funding. But history tells us that times of strong revenues don’t last forever. Lawmakers must work together to agree to a solution to untax groceries sustainably and responsibly.
“Arise is open to numerous ideas for replacement revenue, and we will continue working with the state’s Joint Study Commission on Grocery Taxation to find a path forward. We continue to support our longstanding 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. Closing this skewed loophole would protect funding for public schools and ensure Alabama can afford to end the state sales tax on groceries forever.”