Alabama state grocery tax officially drops to 2%
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On Monday, a new law officially went into effect across Alabama reducing the state sales tax on groceries from 3% to 2%.
The law, which was enacted back in May, is also meant to give cities and counties more flexibility to reduce local grocery taxes. According to a report from Newsweek, this reduction will save Alabamians up to a combined $121 million per year.
“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.”
Gov. Kay Ivey
While this was another 1% drop in the grocery tax, the rate has been cut in half in the last three years as Alabama’s grocery tax sat at 4% before it was first cut back in 2023.
This week’s implementation of HB386 is the second grocery tax cut in three years.
“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.”
Robyn Hyden, Alabama Arise executive director
What is a grocery tax?
A grocery tax is defined as a sales tax applied to food purchased for home preparation and consumption.
While prepared foods—such as hot deli items and restaurant takeout—are typically taxed at the full rate, some states either exempt staple groceries or tax them at a lower rate because food is considered a necessity.
This is the second grocery tax reduction in Alabama since 2022 but the state remains one of just 10 states across the country that puts a tax on groceries at all. Other states include:
- Idaho: 6%
- Mississippi: 5%
- South Dakota: 4.2%
- Hawaii: 4%
- Tennessee: 4%
- Utah: 1.75%
- Missouri: 1.2%
- Illinois: 1%
- Arkansas: 0.0125%
“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.”
Robyn Hyden, Alabama Arise executive director
It’s currently unclear if this will be the final cut to the state’s grocery tax or if further cuts are on their way.
HB 152 also took effect Monday, providing sales tax exemptions on certain purchases of diapers, baby supplies, baby formula, maternity clothing and feminine products.
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