HB605 Alabama 2025 Session

Summary

Primary Sponsor

Chad RobertsonRepresentative

Republican

Session

2025 Regular Session

Title

Taxation; to exempt the sale of certain items used in agricultural production from state sales and use tax

Summary

HB605 would exempt certain agricultural inputs and equipment from Alabama's state sales and use tax and create a certificate program for qualified agricultural producers to claim the exemption.

What This Bill Does

The bill would remove state sales and use tax from the gross proceeds of selling agricultural production inputs, energy used in agriculture, certain diesel exhaust fluid, and agricultural machinery and equipment when used by qualified producers. It establishes an exemption certificate system administered by the Commissioner of Revenue and the Department of Agriculture and Industries, including three-year certificates and wallet cards. It defines who qualifies, how to apply (with documented proof such as IRS forms), how certificates are verified by sellers, and how misuse is punished, along with audits, information-sharing between agencies, and an annual program report. The exemptions would take effect on September 1, 2025.

Who It Affects

• Qualified agricultural producers (farm owners, lessees, or operators who meet the income/activity criteria) who would be able to purchase eligible inputs and equipment tax-exempt using an exemption certificate.
• Sellers of agricultural inputs and equipment, contractors, and state agencies involved in administering, enforcing, and utilizing the exemption certificates (they must verify certificates, apply the exemption, and may face penalties for improper use; the agencies will audit and report on program activity).

Key Provisions

• Provision 1: Exempts the gross proceeds from the sale of agricultural production inputs, energy used in agriculture, certain diesel exhaust fluid, and agricultural machinery and equipment from state sales and use tax, and creates a tax exemption certificate system for qualified agricultural producers.
• Provision 2: Establishes the administrative framework including eligibility criteria, certificate issuance with a three-year validity and wallet card, seller verification at first use, penalties for unlawful use (suspension up to one year and possible revocation after repeated offenses), audits and information sharing between departments, contractor-related tax rules, annual reporting, and an effective date of September 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.