HB387INTRODUCED
Page 0
HB387
RBBUTMN-1
By Representatives Garrett, Stadthagen, Colvin, Kiel
RFD: Ways and Means Education
First Read: 05-Mar-25
1
2
3
4
5 RBBUTMN-1 02/26/2025 KHF (F)KHF 2025-1039
Page 1
First Read: 05-Mar-25
SYNOPSIS:
Under existing law, the state imposes sales or
use taxes upon certain persons, firms, or corporations
at a general rate of four percent. Sales of certain
items are taxed at a reduced rate, including food,
which is taxed at three percent by the state. The
definition of "food" for state sales and use taxes is
applicable to county and municipal sales and use taxes
and county and municipal governments may reduce their
sales and use tax rate on food by 25 percent in any
year in which certain growth targets are met.
This bill would revise the provisions
authorizing a county or municipal governing body to
reduce their sales and use tax on food to eliminate the
25 percent limitation on the rate cut and remove the
growth requirement.
A BILL
TO BE ENTITLED
AN ACT
Relating to sales taxes; to amend Section 40-23-40,
Code of Alabama 1975, to revise the provisions authorizing a
county or municipal governing body to reduce their sales and
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 HB387 INTRODUCED
Page 2
county or municipal governing body to reduce their sales and
use tax on food to eliminate the restriction on the amount of
rate cut and remove the growth requirement.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Section 40-23-40, Code of Alabama 1975, is
hereby amended as follows:
"ยง40-23-40
(a) On June 15, 2023, the definition of "food" in
Sections 40-23-1 and 40-23-60 , shall apply to county and
municipal sales and use taxes. For purposes of county and
municipal sales and use taxes, the sales tax rate on food
shall be established as the general or retail sales tax rate
in effect in the county or municipality on June 15, 2023,
unless otherwise provided by law. An act of the Legislature or
an ordinance or resolution adopted by a county or municipal
governing body levying a county or municipal sales and use tax
inclusive of food passed or enacted on or before June 15,
2023, shall remain operative, but no additional county or
municipal sales and use taxes on food may be levied.
(b) Any county or municipal governing body, by
resolution or ordinance, may reduce the general or retail
sales tax rate on food for local sales and use taxes by 25
percent in any year in which the growth in the applicable
municipal or county general fund exceeds two percent over the
prior year. The ordinance or resolution must be adopted at
least 60 days prior to becoming effective and will take effect
on October 1 following adoption.
(c) A county or municipal governing body that reduces
its general or retail sales tax rate on food for local sales
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56 HB387 INTRODUCED
Page 3
its general or retail sales tax rate on food for local sales
and use taxes pursuant to this section may subsequently
increase the rate on food not to exceed the rate in effect in
the county or municipality on June 15, 2023, unless otherwise
provided by law.
Section 2. This act shall become effective on June 1,
2025.
57
58
59
60
61
62