SB257 Alabama 2023 Session

Summary

Primary Sponsor

Andrew JonesSenator

Republican

Session

Regular Session 2023

Title

Relating to sales taxes; to amend Section 40-23-1, as last amended by Acts 2022-199 and 2022-291, 2022 Regular Session, Code of Alabama 1975, Section 40-23-2, as last amended by Act 2022-346, 2022 Regular Session, Code of Alabama 1975, Section 40-23-60, as last amended by Act 2022-199, 2022 Regular Session, Code of Alabama 1975, and Section 40-23-61, Code of Alabama 1975; to define "food" and begin phasing-out the state sales and use tax on food on September 1, 2023; to require certain growth targets in the Education Trust Fund for future sales tax reductions on food; to establish the sales and use tax rate on food for purposes of county and municipal sales and use taxes as the existing general or retail sales and use tax rate; and to authorize a county and municipality to reduce the sales and use tax rate or exempt food from local sales and use taxes.

Summary

Defines food for tax purposes and starts phasing out the state sales tax on food starting Sept 1, 2023, with future cuts tied to Education Trust Fund growth and lets counties and municipalities set or cut local food taxes to match the general rate or exempt food.

What This Bill Does

It defines what counts as 'food' for sales and use taxes and begins phasing out the state tax on food on Sept 1, 2023, with future reductions based on Education Trust Fund growth. The phase-out follows a schedule: the rate drops from 4% to 3.5% on Sept 1, 2023, then falls by 0.5 percentage points each year on Nov 1 until it reaches 2%, contingent on the Education Trust Fund growing by at least 2% over the prior year. For counties and municipalities, the local food tax rate would be set at the same rate as the county's or municipality's general/retail rate on the act’s effective date, and local governments could reduce the rate or exempt food from local taxes by ordinance or resolution. If the federal definition of 'food' used for SNAP changes or ends, the Legislature would provide a new definition by general law.

Who It Affects

• Residents and consumers who buy food in Alabama; they would see the state tax on food gradually decrease over time as the phase-out progresses.
• County and municipal governments (and their residents); they would gain authority to set, reduce, or exempt local food taxes to align with the general rate.

Key Provisions

• Defines 'food' for sales and use taxes and allows the Legislature to define it anew if the federal SNAP definition changes or ends.
• Starting Sept 1, 2023, the state sales tax on food is reduced from 4% to 3.5%; subsequent reductions of 0.5 percentage points occur each Nov 1 until the rate reaches 2%, with reductions contingent on the Education Trust Fund growing by at least 2% over the prior year.
• Local (county and municipal) food tax rate is set to the general/retail rate in effect on the act’s effective date; local governments can lower the rate or exempt food from local taxes by ordinance or resolution at least 60 days before the effective date.
• The act becomes effective Sept 1, 2023, and ties future state food tax reductions to specific growth milestones in the Education Trust Fund.

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