It’s not often you see unanimity in the volatile political body known as the Alabama Legislature, but a bill that will lower Alabama’s grocery tax one percent sailed through both the Alabama House and Senate with unanimous approval last week.
HB386 was signed into law May 9th by Gov. Kay Ivey. The new law takes effect September 1, 2025, and will reduce the state’s sales tax on groceries from 3% to 2%.
Two years ago, the Alabama Legislature voted to reduce the state’s grocery tax from 4% to 3%. That 4% rate, among the nation’s highest state grocery taxes, had been in place for more than 83 years.
HB386 won’t change the local tax rates charged by counties and municipalities, but it prevents counties and/or municipalities from increasing taxes on food. Additionally, the bill provides a means for counties and/or municipalities to lower their food tax, provided that any such ordinance must not take effect until at least 60 days after its passage.
The new bill is another step forward in what Rep. Jamie Kiel (R-Russellville) hopes will eventually be a complete elimination of Alabama state taxes on groceries.
“In 2023, I voted to cut the grocery tax by 25%, and today I voted to cut it again for a total reduction of 50%,” Kiel told the FFP last week. “The grocery tax affects all Alabamians. I believe that there should be no tax on groceries and I am going to continue to work toward that goal.”
10 states impose state taxes on groceries, with Mississippi’s 7% rate the nation’s highest. The one percent reduction in Alabama is expected to save Alabamians approximately $150 million each year, according to the Alabama Policy Institute.
