Senate Bill 221 Alabama 2026 Session

Summary

Primary Sponsor

Arthur OrrSenator

Republican

Session

2026 Regular Session

Title

Taxation; to exclude credit card transaction fees from sales and use tax calculations

Summary

SB221 would exclude credit card transaction fees from the sales and use tax base for purchases made with credit or debit cards.

What This Bill Does

Under current law, credit card transaction fees are included in the amount taxed for purchases. The bill would remove those fees from the tax base, so sales tax would be calculated on the price of goods and services purchased with a card without counting the card fee. This applies to purchases made using credit or debit cards and defines what counts as a credit card transaction and a credit card fee. The Department of Revenue would set rules to administer these changes. The act would take effect on September 1, 2026.

Who It Affects

• Merchants and sellers who accept credit or debit cards; their taxable base on card transactions would be reduced because the card transaction fee would no longer be included in the tax calculation.
• Consumers who pay with credit or debit cards; they could pay less sales tax on card purchases if a separate card transaction fee is charged.

Key Provisions

• Excludes credit card transaction fees added to the price of goods or services purchased by credit or debit card from the sales and use tax calculation.
• Defines terms: credit card, electronic payment transaction, and credit card transaction fee.
• Requires the Department of Revenue to establish rules to administer the act.
• Sets an effective date of September 1, 2026.

AI-generated summary using openai/gpt-5-nano on Feb 12, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue