Alabama shoppers could see savings under a proposed cut to the sales tax on food

Independent

18-03-2025

Alabama lawmakers on Tuesday advanced a series of tax cuts, including a 1% reduction on the state sales tax on food, as lawmakers in both parties said families are being hurt by soaring grocery prices.
The four Republican-sponsored bills total about $192 million in tax cuts, most of which comes from the proposed 1% cut to the grocery tax. Another bill would allow people 65 and older to withdraw more money from retirement accounts without paying state income tax.
'Today we have the opportunity to reduce taxes on just about everyone in the state of Alabama,' said Rep. Danny Garrett, the Republican sponsor of the bills.
The Alabama House of Representatives approved the bills without a dissenting vote, sending them to the Alabama Senate.
The proposed cut on the grocery tax would from reduce the state sales tax on food from 3% to 2%. Lawmakers in 2023 reduced the tax from 4% to 3% in 2023, but an additional reduction to 2% was hinged on budget growth that did not materialize.
The latest bill would reduce the tax to 2% on Sept. 1 regardless of budget growth.
Nine states place a sales tax on groceries. Lawmakers in several of those states have proposed cutting or removing the tax on food.
The proposed tax cuts come despite uncertainty surrounding state budgets because of possible cuts or changes to federal programs. But supporters said families are being hurt by rising grocery prices now.
'I think this is going to go a long way toward helping our citizens balance their budgets and save money that they preciously need to help raise their children," House Speaker Pro Tem Chris Pringle said during debate.
Alabama lawmakers for years explored the removal of the entire state sales tax on food, but the efforts faltered because of how much it would reduce education funding. The state's Education Trust Fund is fueled by income and sales taxes. The Legislative Services Agency estimated that the 1% reduction will cost almost $122 million.
Rep. Laura Hall, a Democrat, noted that Republicans created a $100 million school voucher program, which will let eligible families tap state dollars for private school or home school expenses. She said removing the sales tax on food entirely would help all families.
'Food continues to go up, and it is a challenge at best to go to the market,' Hall said.
Representatives also approved a bill to allow people over 65 to tap an additional $6,000 from defined contribution retirement plans without paying state income tax. The bill would exempt the first $12,000 of taxable retirement income. The current exemption is $6,000. The tax cut would cost about $44 million each year.
Another bill would increase the state's standard deduction and the income threshold for the maximum dependent exemption.