HB387 Alabama 2025 Session

Updated Feb 23, 2026

Notable

Summary

Primary Sponsor: Danny GarrettRepresentative
Republican
Session: 2025 Regular Session
Title: Sales tax on food, limit on local rate reduction and growth requirement removed
Summary: HB387 would change how counties and municipalities set the local food sales tax by tying the rate to the 2023 general rate and allowing targeted reductions and potential future adjustments under specified limits.
What This Bill Does
It defines the local food tax rate for county and municipal taxes as the general rate in effect in the county or municipality on June 15, 2023, and generally prohibits creating new local food taxes beyond what existed as of that date. It allows a county or municipal governing body to reduce the local food tax rate by 25 percent in any year when growth in the applicable general fund exceeds 2 percent over the prior year, with the ordinance or resolution taking effect after at least 60 days and becoming effective October 1 after adoption. If a local government reduces the rate, it may later increase the rate on food but not above the rate that was in effect on June 15, 2023. The act becomes effective on June 1, 2025.

Who It Affects
County and municipal governments that collect local food tax and must follow the new rules
Residents and businesses in counties and municipalities who pay the local food tax, who could see rate reductions or increases under the new rules

Key Provisions
For local taxes, the rate on food is set to the general rate in effect on June 15, 2023, and no new local food taxes may be levied beyond amounts in place as of that date.
A county or municipality may reduce the local food tax rate by 25 percent in years when the growth in the local general fund exceeds 2 percent over the prior year; the reduction requires a notice period and takes effect on October 1 after adoption.
A locality that reduces the rate may later increase it again, but the increase may not raise the rate above the June 15, 2023 level.
The act takes effect June 1, 2025.

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