HB396 Alabama 2023 Session

Summary

Primary Sponsor

Arnold MooneyRepresentative

Republican

Session

Regular Session 2023

Title

To amend Sections 40-23-1 and 40-23-4, as last amended by Act 2022-291, Act 2022-293, Act 2022-373, and Act 2022-199, 2022 Regular Session, Code of Alabama 1975, related to sales taxes; to define food and exempt sales of food from state sales and use taxes; to establish the local sales tax rate on food for purposes of county and municipal sales and use taxes as the existing general or retail local sales tax rate; and to allow a local governing body to reduce the local sales tax rate or exempt food from local sales and use taxes.

Summary

HB396 would define 'food' for Alabama sales tax purposes and exempt its sale from state taxes starting in 2024, while leaving local governments to determine or adjust local food taxes at their existing rate levels.

What This Bill Does

It defines food for sales tax purposes and exempts state sales and use taxes on food beginning September 1, 2024. It also says the local sales tax on food will use the county or municipality's general or retail rate in effect on the act’s effective date, and it lets local governments reduce that rate or exempt food from local taxes with proper notice and action.

Who It Affects

• Consumers in Alabama who purchase food; they would no longer pay state sales tax on food starting Septemeber 1, 2024 (though local taxes may still apply where not exempted).
• County and municipal governments in Alabama; they would establish or adjust local food tax rates (or exemptions) and must follow notice requirements before changes take effect.

Key Provisions

• Defines 'food' for tax purposes using the federal definition referenced in 7 U.S.C. §2011 et seq., with a provision to adopt a new definition by general law if the federal definition ends.
• Exempts the sale of food from state sales and use taxes beginning September 1, 2024.
• Sets the local food tax rate to the existing general or retail local rate in effect on the act’s effective date; local governments may reduce the rate or exempt food from local taxes, with ordinances or resolutions required to be adopted at least 60 days before they take effect.
• Changes apply to Sections 40-23-1 and 40-23-4, with the act becoming effective in 2024 and state exemption date specified, while local actions are constrained by the stated notice and effective-date requirements.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Relating to sales and use tax; to define food; to exempt food from sale and use tax; to provide for local sale tax on food