Alabama cuts the state sales tax on food from 3% to 2%
- Jurisdiction
- United States — Alabama
- Tax
- sales-tax
- Change type
- Rate change
- Status
- In force
- Impact
- FYI
- Announced
- 12 May 2025
- Effective
- 1 September 2025
- Instrument
- US-ACT-HB-386
- Authority
- Alabama Department of Revenue (revenue.alabama.gov)
- Verified
- Fetched from official source · high confidence
Alabama retailers selling food (SNAP-eligible items). City and county food tax rates were not reduced by HB 386.
No action — monitoring only. The 2% rate was subsequently suspended May 1 – June 30, 2026 by Act 2026-604 (shipped separately as us-alabama-food-sales-tax-2026).
Alabama HB 386 (Act 2025-305), enacted May 12, 2025 according to the Legislature's record, reduced the state sales and use tax rate on food (SNAP-eligible items) from 3% to 2%, effective September 1, 2025. The original 4% → 3% step under Act 2023-554 (effective September 1, 2023) is documented separately. Local city and county food tax rates were not reduced by HB 386.
What changed in detail
Alabama House Bill 386 (Act 2025-305), passed on 6 May 2025 and enacted on 12 May 2025 according to the Legislature’s record, cut the state sales and use tax rate on food from 3% to 2%, effective 1 September 2025. The Alabama Department of Revenue announced the cut in a notice that cites Act 2025-305.
“Food” here means items eligible for purchase under the federal Supplemental Nutrition Assistance Program (SNAP). Under the Act, the 2% step in Ala. Code § 40-23-2(6) was conditional on the Education Trust Fund growing by at least 3.5% in fiscal year 2025. The Department’s notice confirms that the cut went ahead.
This was the second reduction from the original 4% state rate on food. The first, under Act 2023-554, took the rate to 3% on 1 September 2023.
HB 386 did not reduce city and county sales and use tax rates on food. Those local rates stay frozen at their 15 June 2023 levels, though a local government may lower its own rate.
What it means
The 2% state rate on food is the current rate, but it was briefly set aside. Act 2026-604 suspended the state tax on food from 1 May to 30 June 2026. When the suspension ended, the 2% rate applied again.
Local food taxes did not change with either measure, so a grocery sale in Alabama is not tax-free. Retailers that changed their systems for the suspension should confirm that the state 2% was switched back on for sales from 1 July 2026.
Proof
In accordance with Act 2025-305, the state sales and use tax rates on food will be reduced from 3 percent to 2 percent on September 1, 2025.
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