Latest news with #HB387
Yahoo
09-05-2025
- Business
- Yahoo
Gov. Kay Ivey signs grocery tax cut into law
Alabama Gov. Kay Ivey delivers the State of the State address in the Old House Chamber at the Alabama State Capitol on Feb. 4, 2025 in Montgomery, Alabama. (Will McClelland for Alabama Reflector) Gov. Kay Ivey Friday signed a bill reducing the state sales tax on groceries. HB 386, sponsored by Rep. Danny Garrett, R-Trussville, will cut the state share of the tax from 3% to 2% effective Sept. 1. 'When we can reduce taxes in Alabama and provide some relief to the hardworking people of this state, I am all for it. I was pleased to sign House Bill 386 to take another notch off our state grocery tax,' Ivey said in a statement. Alabama is one of just a few states that still taxes groceries. Until September 2023, the state taxed groceries at the full 4% state sales tax that's been around since 1939. Combined with local taxes, the total tax on food in Alabama ran as high as 10% in some places. In Montgomery, a family spending $600 a month on groceries could pay up to $60 in taxes. The Legislature in 2023 reduced the state sales tax on groceries from 4% to 3%. But it also required growth of at least 3.5% in the Education Trust Fund (ETF), which gets most of the grocery tax. Compared to the previous fiscal year, the current 2025 ETF has grown 3.28% this year, compared to the 2024 ETF at the same point, but budget chairs indicated they were comfortable with moving forward. Under the new legislation, the tax bill on $600 worth of groceries in Montgomery will go from $54 to $48. Lawmakers also changed the bill to allow local governments to reduce their sales and use tax on groceries, effectively combining HB 387 with the legislation — which the House passed in March and a Senate committee in late April. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Yahoo
07-05-2025
- Business
- Yahoo
Alabama Senate passes bill to reduce sales tax on groceries
General Manager Brian Horak walks down an aisle at Post 60 Market in Emerson, Nebraska. The Alabama Senate Thursday approved a bill to cut the state grocery tax from 3% to 2%. (Kevin Hardy/Stateline) The Alabama Senate Tuesday passed a bill to cut the state sales tax on groceries from 3% to 2%. HB 386, sponsored by Rep. Danny Garrett, R-Trussville, will fast-track a tax reduction on groceries by taking the next cent off the state sales tax on groceries. Lawmakers passed similar legislation in 2023 that would have made the cut if the Education Trust Fund (ETF), which pays for public education in the state and gets most of the grocery tax revenue, grew 3.5%. 'We took off the first cent. The second cent was going to come off when we hit a growth metric of 3.5%. We have not met that, but our budget chairman feels comfortable in going ahead and moving forward,' said Sen. Andrew Jones, R-Centre, who presented the bill to the Senate. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX Alabama is one of only 13 states that taxes groceries, and until September 2023, it had taxed groceries at the full state sales tax rate of 4% since the sales tax was implemented in 1939. With the addition of local taxes, the total tax on groceries in the state could reach as high as 10%. In Montgomery, a family would pay up to $60 in taxes if they spent $600 on groceries monthly. Under the bill passed Tuesday, the bill would reduce the levies on $600 of groceries from $54 to $48. The bill passed 34-0 with little discussion and went to the House for concurrence on the Senate amendment. Finance and Taxation Education Trust Fund Budget Chair Sen. Arthur Orr, R-Decatur, said it was a clarifying amendment from the Department of Revenue to ensure sales and use taxes are equal. The Senate also changed the bill to allow local governments to reduce their sales and use tax on groceries, effectively combining HB 387 with the legislation. The House passed HB 387 in March, and a Senate committee approved the bill in late April. 'This bill just basically takes [HB] 387, puts it into [HB] 386. So, in this one grocery tax bill, we're cutting the tax 1%, and also allowing locals to reduce their taxes when they want to,' Garrett said to the House during concurrence. The House concurred 102-0 with Senate changes, and the bill went to Gov. Kay Ivey. The bill carries a fiscal note of $121.9 million. State budget officials said last September that growth in the ETF was expected to be below the 3.5% required under the 2023 law to cut the state share of the grocery tax. Garrett was previously reluctant to support additional reductions to the grocery tax because of the potential impact on the ETF. Efforts to eliminate the grocery tax traditionally came from Democrats but had typically been unsuccessful due to concerns about the effect on the state's education budget. Alabama Arise, a left-leaning organization working on poverty issues, celebrated the bill's passage, saying that the first reduction was an 'essential first step toward tax justice' and said this legislation 'continues that momentum.' 'The grocery tax drives many families deeper into poverty, and Arise remains committed to the goal of eliminating it entirely,' said Robyn Hyden, executive director of Arise, though she added that it's important to ensure the grocery tax reduction is sustainable in the future, suggesting that the state cap or end 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,' Hyden said. SUPPORT: YOU MAKE OUR WORK POSSIBLE
Yahoo
19-03-2025
- Business
- Yahoo
Alabama House approves grocery tax cut, income tax adjustments
Rep. Danny Garrett, R-Trussville, looks up to the gallery of the Alabama House of Representatives on March 18, 2025, at the Alabama State House in Montgomery, Alabama. The chamber unanimously passed a $192 million tax cut package of bills sponsored by Garrett. (Anna Barrett/Alabama Reflector) The Alabama House of Representatives unanimously passed $192 million in tax cuts in a four-bill package on Tuesday. HB 386, 387, 388 and 389, all sponsored by Rep. Danny Garrett, R-Trussville, will reduce the state grocery tax by 1%; allow local governments to cut their grocery taxes; increase the amount of retirement income exempt from taxes and increase income tax thresholds, deductions and child credits for those making less than $120,000 a year. The money comes out of the $9.2 billion Education Trust Fund (ETF), which pays for most public education funding in the state. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX Garrett said in an interview that the overtime tax exemption served as an obstacle in reducing taxes on groceries. The exemption cost the ETF $234 million, well above earlier projections, and Republican legislative leaders had signaled they would not renew the deduction when it expires in June. 'And so what we've done is basically pass taxes that are broader,' Garrett said. 'If it's sunsets, then we'll have a chance to evaluate it and sort out some things.' HB 386 would reduce the state's tax on groceries from 3% to 2%. Alabama is one of 13 states that taxes groceries, according to the AARP. Alabama Republicans have been working on reducing the grocery tax from its original 4% since 2023. The reduction to 2% was only supposed to happen if the ETF's revenue grew by 3.5%, but that target has not been met. Garrett said the legislation will accelerate the grocery tax reduction, and it will go into effect on Sept. 1 if it passes. 'The next 25% reduction was going to take place when revenue grew 3.5%,' he said. 'That has not happened this year, it probably will not next year.' The grocery tax reduction takes $121 million from the ETF's revenue. HB 387 is similar. It allows but does not require local governments to reduce local grocery taxes. House Speaker Nathaniel Ledbetter, R-Rainsville, said after the House adjourned that local governments are already allowed to increase grocery taxes, but not decrease. 'They've always had the opportunity to raise it, but they didn't have the opportunity to decrease it,' he said. 'Hoover wanted to decrease one and because of the state law, it couldn't. So this gives them the opportunity to do that.' HB 388 increases the amount of untaxable retirement income for Alabamians older than 65 from $12,000 to $24,000 for couples and from $6,000 to $12,000 for individuals. Ledbetter said it is good for senior citizens of the state. 'You know, they're on fixed income, and helping them with the ability to do better as far as finances go is important,' Ledbetter said in an interview. HB 389 increases the threshold for optional income tax deductions. Under current law, married taxpayers filing jointly can deduct $8,500 if their income is less than $25,000. The proposed legislation increases the optional deduction to $9,500 if the couple's income is less than $28,000. Dependents of a married couple filing jointly whose gross income is less than $60,000 can deduct up to $1,000, which is up from the household income of $50,000. For families making less than $120,000, their dependents can claim deductions of up to $500, which is up from a household income of $100,000. The cuts will mostly impact the Education Trust Fund budget. Rep. Thomas Jackson, D-Thomasville, said he worried about the effect, saying that the body should focus on improving education rather than diminishing its budget. 'How are we going to regroup and replenish the Education Trust Fund budget when we're taking so much from it?' Jackson asked Garrett on the House floor. But Garrett said the ETF would not feel the impact. 'We feel through the growth of the budget and through continued good, fiscally responsible budgeting practices, we can sustain these cuts,' Garrett said on the House floor. 'But the answer to your question is: if we can improve the education outcomes, if we can improve labor participation, those are the types of things that are going to help us grow our revenue stream.' Ledbetter said he is supportive of the package because it will impact most Alabamians. 'The tax breaks we did today affects everybody in this state, and that was a priority to make sure it was widespread and affected everybody, especially the senior citizens,' Ledbetter said. Ledbetter said although he is supportive of an overtime tax exemption, it is more important to be fiscally responsible and fund education. 'I get it and I certainly support that,' Ledbetter said. 'But I also think there is a balance, as far as being able to afford it.' Garrett said he would rather have a tax reduction that impacts all Alabamians than one that costs $300 million and affects a smaller group of Alabamians. 'I think what we're doing is broad-based that's going to affect a lot of Alabama,' he said. The package now goes to the Senate. SUPPORT: YOU MAKE OUR WORK POSSIBLE
