SB89 Alabama 2019 Session

Updated Feb 24, 2026

Summary

Primary Sponsor: Clay Scofield
Republican
Session: Regular Session 2019
Title: Lease tax, state and local levies payment and collection based on either seller's place of business or where delivered, automotive vehicles paid where vehicle registered after first payment, Sec. 40-12-222 am'd.
Summary: SB 89 would change Alabama's lease tax by basing the tax on delivery or residence for leased property, set new rates, and apply retroactively.
What This Bill Does
It creates a 4% tax on gross proceeds from leasing or renting tangible property, with a 1.5% rate for certain automotive vehicles and trailers, and a 2% rate for linens and garments. It allows lessors to pass the tax to lessees by adding it to the lease price, but the amount must still be counted in gross proceeds for tax purposes; there are restrictions on pass-through for leases to state or local governments. Tax base is determined by delivery location if the property is delivered, or rental location if it is picked up; for automotive leases, the initial payment uses the delivery/pickup rule, while subsequent payments are based on the lessee's resident address. The bill is retroactive to open tax periods and becomes law immediately upon passage.

Who It Affects
Lessor businesses that lease or rent tangible personal property in Alabama (they would collect and remit the new taxes and determine tax base under delivery or pickup rules).
Lessees/customers who lease or rent tangible personal property (they may see taxes included in lease prices, and autos may be taxed based on their address for ongoing payments).

Key Provisions
General lease tax rate of 4% of gross proceeds; automotive vehicles, truck trailers, semitrailers, or house trailers taxed at 1.5%; linens and garments taxed at 2%.
Lessors may pass the tax through to lessees by adding to the lease price; such amounts must remain part of gross proceeds for tax purposes; pass-through to state/local governments is restricted unless tax and fee are included.
Tax base determined by delivery location if delivered, or rental location if picked up; for automotive vehicle leases, initial payment follows the base rule while subsequent payments are based on lessee's resident address.
Retroactive application to all open tax periods and declaratory of existing law; effective immediately upon passage.

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