House of Representatives votes to further cut the grocery tax

March 18, 2025 – MONTGOMERY, AL – The Alabama House of Representatives passed legislation that would further lower the sales tax on groceries.

House Bill 386 (HB386) is sponsored by state Representative Danny Garrett (R-Trussville).

Alabama has a four percent sales tax. While the state sales tax per se is not particularly harsh compared to other states, Alabama is one of the few states in the country to tax food. The Legislature addressed this issue a couple of years ago when they lowered the sales tax on food from four percent to three percent. If state revenues met certain very optimistic targets in revenue growth, there was supposed to be another cut on groceries this year. At this point it does not look like those revenue growth targets are going to be hit.

HB386 would go ahead and cut the grocery tax to two percent anyway.

The legislature's eventual goal is to eliminate the state sales tax on groceries altogether.

Rep. Thomas Jackson (D-Thomasville) asked, "Why not do the deduction all at once instead of doing it piecemeal."

"We could but we have been on a sugar high with revenue," explained Garrett. "Our budget is in good shape. We are providing tax cuts to a broad base of people without putting our budget in jeopardy."

Garrett was cautiously optimistic about the long term economic outlook of the state.

"Strategic investments that we are making along with the tax cuts will improve the workforce participation," predicted Garrett.

If more people in Alabama actually worked and participated in the economy the state would have less poverty, more tax revenues, and could eliminate the tax on groceries.

Garret said that Moody's has done a study on states' ability to weather an economic downturn and Alabama scored high.

"We are in a good fiscally responsible situation," said Garrett. "We are the only state to show improvement in the last education report card."

Jackson asked, "How will they know that they have had a 2% reduction?"

"We already have the second lowest state sales tax in the country and we are reducing that on groceries," said Garrett.

Jackson said that most people are struggling economically and they aren't seeing any improvement.

"This is not really a resolve to their issues because inflation is so widespread," Rep. Jackson said. "It is going to get worse.

Rep. Laura Hall (D-Huntsville) said that this is an issue that some members of the Legislature have been working on for years.

Garrett acknowledged that, "This is a long term issue. I received a phone call from (former Rep.) John Knight and I wanted to thank him for his leadership on this."

Knight, when he was in the legislature would file a bill to eliminate the sales tax on groceries every year.

HB386 passed with a unanimous vote of 103 to 0.

The bill had 96 cosponsors.

The House also passed HB387 which removes revenue guardrails put in place to limit counties and municipalities from reducing their local taxes on groceries.

HB387 was also sponsored by Rep. Garrett.

"What this bill will do is remove that guard rail and allow them to reduce the grocery tax by whatever amount they want to," said Garrett. "There are municipalities who said that they tried to reduce the grocery tax and couldn't because of this."

It also passed 103 to 0.

The two bills were part of a package of bills to provide Alabama taxpayers with $192 million in tax relief.

The state of Alabama takes in over $14 billion in revenue annually – not counting federal matching dollars. The $192 million in cuts amounts to a decrease of just 1.37 percent.