The Alabama House of Representatives has passed a series of tax cut bills introduced by State Rep. Danny Garrett (R-Trussville), aiming to provide financial relief to residents by reducing taxes on groceries, retirement income and state income taxes.
“Today we have the opportunity to reduce taxes on just about everyone in the state of Alabama,” Garrett said. “We’ve opted to present a package of bills that cut some other taxes that we think will be broad based and will help retirees.”
The first bill passed, HB386, will accelerate the state’s grocery tax reduction by an additional 1%, bringing the total reduction to 2% by 2025. Currently, Alabama taxes food at a reduced rate of 3%; this bill would lower it to 2%, resulting in an estimated $123 million in annual savings. Combined with previous cuts, the total savings from the grocery tax reduction would reach approximately $246 million annually.
Some concerns were raised about the impact on education funding, Garrett emphasized that this tax cut is part of a broader package of relief measures. “We just need to be mindful that we make cuts and reductions that are sustainable,” explained Garrett. “I believe there’s a sense of the body that we should continue to evaluate that. We are one of the few states that taxes groceries, but we now have cut 50%, so I believe this is a step toward that. We’re providing relief in other areas to a broad base of people, and not jeopardizing our education budget.”
The next measure passed, HB387, provides more flexibility to local governments in adjusting food tax rates. It removes existing restrictions that limited counties and municipalities from reducing their sales tax on food by more than 25% in any given year unless certain growth targets were met. This change allows governments to make more substantial cuts to the grocery tax if they choose.
The third bill passed, HB388, targets retirement income by doubling the current exemption for individuals aged 65 and older from $6,000 to $12,000. This change benefits retirees relying on defined contribution retirement plans, such as 401(k) and IRAs, and is estimated to save Alabama retirees a total of $44.8 million annually.
The final proposal passed, HB389, focuses on reducing the overall state income tax burden by increasing the income floor for the standard deduction and expanding the income threshold for the maximum dependent exemption. These changes aim to lower the amount of income subject to state taxes, benefitting middle-class and lower-income residents, with an estimated $23.8 million in tax cuts.
“This is designed to help working families, primarily those making $60,000 or less and giving them a tax break,” said Garrett.
These bills passed unanimously and are part of the Alabama Legislature’s ongoing efforts to provide tax relief to residents while maintaining fiscal responsibility. Since 2022, the legislature has passed over a dozen tax cuts, saving Alabama families thousands of dollars each year. They now move to the Senate for consideration.
“With the passage of this tax cut package, the Alabama House of Representatives has now passed 15 tax cuts since the current quadrennium began in 2022,” said House Speaker Nathaniel Ledbetter (R-Rainsville). “As shopping carts get lighter and grocery bills continue to rise, I am particularly proud that we were able to double down on the grocery tax cut, which is the largest cut in state history and will save Alabama families a minimum of $236 per year.”
Today is the 14th legislative day.
Grace Heim is a state and political reporter for Yellowhammer News. You can follow her on X @graceeheim or email her at [email protected].
