State sales tax on food reduced from 4% to 3%
Starting today, September 1, 2023, Alabama grocery shoppers will pay less sales tax on their food purchases. The state sales tax on groceries has been reduced from 4% to 3%, thanks to a historic tax cut passed by the Legislature earlier this year. This means that for every $100 spent on groceries, Alabamians will save $1 in taxes.
The tax cut was championed by Lt. Gov. Will Ainsworth, who said it was time to “permanently reduce the tax burden for all Alabama families”. He worked with a coalition of conservative lawmakers, including Sen. Andrew Jones, House Education Budget Chair Danny Garrett, and Senate Education Budget Chair Arthur Orr, to create a plan that would not affect public education funding.
The tax cut applies to any food that falls under the definitions of the federal food stamp program, known as SNAP, which means all groceries are covered except for pre-prepared, hot food from in-store delis. A clause in the law also prevents cities and counties from raising their local sales taxes on groceries, but they have the option of following the state’s lead and cutting them if they choose.
Alabama was one of the few states that taxed groceries at full rate
Before the tax cut, Alabama was one of only three states that taxed groceries at the full rate – South Dakota and Mississippi are the others. Alabama was also one of only 13 states in the nation that levied any tax on food. According to Ainsworth, this put an unfair burden on low-income and middle-class families, especially during the COVID-19 pandemic and the rising inflation.
Between 2022 and 2023, the cost of food rose by an average of 7.7% according to the U.S. Bureau of Labor Statistics. Eggs alone cost a third more than they did last year, bread and cereal are up by 10%, and meat and poultry are up by 8%. These price increases have made it harder for many Alabamians to afford healthy and nutritious food.
Ainsworth said that cutting the grocery tax was a way of giving back to the people who have been struggling during these difficult times. He said that the tax cut would save an average family of four about $100 a year, which could make a difference in their monthly budget.
More work remains to eliminate the grocery tax completely
While Ainsworth and his allies celebrated the tax cut as a historic achievement, they also acknowledged that more work remains to eliminate the grocery tax completely. Ainsworth said that his goal is to continue chipping away at the tax until it is gone in the near future.
The current law provides for another $150 million tax cut that will automatically go into effect as soon as 2024, if the growth in the Education Trust Fund continues at the same pace as recent years. This would reduce the state sales tax on groceries from 3% to 2%. Ainsworth said that he has empaneled a legislative study group to run the numbers and find ways to remove the remaining 2% without hurting education or other essential services.
He also urged local governments to join him in cutting their sales taxes on groceries, which can range from 1% to 5% depending on the location. He said that he would work with mayors, council members, and commissioners to help them find solutions that would benefit their constituents.
Ainsworth said that he was proud of what he and his colleagues have accomplished so far, but he was not satisfied until Alabama becomes one of the states that does not tax groceries at all. He said that he believes in cutting taxes, not shifting them around, and that he will keep fighting for the hardworking people of Alabama.