On Thursday, Gov. Kay Ivey signed the historic grocery tax cut into law, reducing the state’s 4% tax on groceries to 3% starting Sept. 1. An additional 1% cut could follow on Sept. 1, 2024, if state budget trajectories stay consistent.
“As Alabamians and Americans alike are grappling with tighter times, I am hopeful that this decision by the Legislature to slightly reduce the sales tax on certain food items will be truly felt by Alabama families,” she said.
Alabama was one of only three states taxing groceries at the same rate as other goods. Last year, food prices increased 13.5% – the largest 12-month percentage increase since 1979.
Cutting the grocery tax has been at the margins of the state’s agenda for over 20 years. This year, Lt. Gov. Will Ainsworth and the Legislature got it done with total support. It’s estimated to save families hundreds of dollars each year.
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“With the governor’s signature on the bill, families across the state will soon receive a dinner table tax cut and get a much needed measure of relief from Joe Biden’s skyrocketing inflation,” Ainsworth said. “Best of all, we were able to do this without the need to raise any other taxes.”
“Passing the largest tax cut in state history demonstrates what can be accomplished if we stay true to our conservative beliefs, rally Alabamians toward a common goal, and boldly attempt to do what others say can’t be done.”
Lawmakers are creating a study commission to explore the possibility of eventually removing all of the tax. Continued assessment and sustainable relief is top of mind for lawmakers.
“Our long term goal is to utilize that study commission, we’re taking it down in this legislation from 4% to 2%, we want to look and figure out how we can take it from 2% to zero,” Sen. Andrew Jones, the Senate bill’s sponsor said.
The tax reduction applies to foods defined by the federal Supplemental Nutrition Assistance Program (SNAP) – including a wide variety of grocery store items such as fruits, vegetables, meats, and dairy products. It does not apply to items such as prepared food and alcohol.
Now officially signed into law, Alabama House Speaker Nathaniel Ledbetter reflected, “Inflation is costing Alabama’s families $741 more per month. Cutting the grocery tax in half is the largest tax cut in our state’s history, and Alabama legislators offered families much-needed relief at the cash register.
“This is a huge win for Alabama and our hard-working citizens.”
Grayson Everett is a staff writer for Yellowhammer News. You can follow him on Twitter @Grayson270
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