Major Sales Tax Changes in Alabama

Starting today, Alabama shoppers will notice two significant adjustments in sales tax at the register.

The sales tax on groceries will decrease from 3% to 2%, while a new three-year exemption will eliminate the 4% state sales tax on baby, birth, and menstrual products.

For groceries, the 2% tax applies to items defined as “foods” by the federal SNAP program, which notably excludes alcohol, tobacco, and hot prepared foods.

This grocery tax reduction was initially enacted by the Alabama Legislature in 2023.

Lt. Col. Ainsworth gained unanimous backing for these measures from State Sen. Andrew Jones (R-Centre) and state legislator Danny Garrett (R-Trussville), orchestrating a gradual cut that contributed to a 3.5% increase in Education Trust Fund revenue year-over-year.

At that time, it was hailed as the largest tax cut in Alabama’s history.

In 2025, lawmakers accelerated this reduction by another 1%, projecting annual savings of about $133 million.

When combined with prior reductions, total savings from grocery tax cuts are estimated to be around $246 million annually.

Local and county sales taxes will remain unchanged unless local governments decide to lower them, which is allowed under current law.

In addition, a new tax cut takes effect today for baby-related products such as formulas, diapers, wipes, bottles, breast milk pumps, and menstrual hygiene products.

Prior proposals for these tax cuts came from Senator Arthur O’Au (R-Decatur) and were ultimately accomplished in 2025 with bipartisan support.

Overall, these changes represent an ongoing series of tax reductions enacted by lawmakers during this legislative period.

Alabama also established a Mileage Income Tax Credit for Volunteer First Responders and phased out the Minimum National Business Privileges tax for small filers starting in the 2024 tax year, which temporarily lowers state taxes for extra work and alleviates one-time income taxes for families.

“An additional $135 million in tax cuts is effective immediately,” stated House Speaker Nathaniel Ledbetter (R-Rainsville). “Our fiscally conservative governance has consistently positioned Alabama among the states with the lowest taxes in the U.S., totaling more than $1.5 billion in tax cuts.”