SB299 Alabama 2018 Session

Summary

Primary Sponsor

Gerald O. Dial

Republican

Session

Regular Session 2018

Title

State sales and use tax increased, phase-in period, sales and use tax on food phased out, exempt by 2021, counties and municipalities prohibited from increasing sales tax on food, Secs. 40-23-2, 40-23-61 am'd.

Summary

SB 299 would raise Alabama's general sales tax in the short term while phasing out the tax on food, making food tax-exempt by 2021, with a plan to keep revenue neutral.

What This Bill Does

It raises the state’s general sales and use tax rate on non-food goods on a schedule: 4.25% in 2018, 4.5% in 2019, 4.75% in 2020, and 5% in 2021. It phases out the tax on food by reducing the food tax rate by one percentage point each year starting in 2018, ending with food being exempt in 2021. It defines what counts as FOOD, SALES TAX, and USE TAX for the purposes of the bill and updates the rate structure for various categories. It also specifies how a portion of the new revenue from certain taxes is split between the Education Trust Fund (58%) and the State General Fund (42%), and requires a 2022 review to ensure the changes are revenue-neutral.

Who It Affects

• Consumers and households in Alabama who buy goods: they would pay higher taxes on most items through 2021, but food purchases would see a declining tax rate each year and become tax-exempt starting in 2021.
• Businesses that sell taxable goods and collect sales tax: they would implement and remit the new, increasing general tax rates and handle the phased-out tax on food, along with updated record-keeping and reporting requirements.

Key Provisions

• Increase the state general sales/use tax rate on non-food items: 4.25% (2018), 4.5% (2019), 4.75% (2020), 5% (2021).
• Phase out the food tax over four years by reducing the food tax rate by 1 percentage point each year beginning 2018, with food fully exempt starting September 1, 2021.
• Food is defined for the bill using the SNAP-related federal definition; if SNAP changes, the Legislature would provide a new definition by general law.
• Amend sections 40-23-2 and 40-23-61 to implement the new rate structure and the food phase-out; specify how taxes apply to various categories of sales and use tax.
• From the portion of the new tax revenue described in subsection (4), 58% goes to the Education Trust Fund and 42% goes to the State General Fund.
• Section 5 requires the Legislature to review the act in the 2022 Regular Session and make adjustments to ensure revenue neutrality.
• Section 6 sets the act’s effective date as the first day of the third month after passage and the Governor’s approval.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation