Advocacy groups in Alabama are urging the public to contact local lawmakers over the continuation of the state sales tax on groceries.
A law passed last summer was set to cut the statewide 4% grocery tax in half. The legislation reduced the tax to 3% on Sept. 1, 2023. It was scheduled to reduce to 2% on Sept. 1, 2024, but that will no longer happen. This is due to the law having a stipulation that Alabama’s education revenue must increase to offset losses for the deduction to be activated.
“That was a kind of a session in compromise last year. Exactly what kinds of funding was going to be necessary to protect public education,” said Carol Gundlach, a senior policy analyst for the nonprofit Alabama Arise. “The legislature decided that they wanted to require that revenue to what's called the Education Trust Fund. [It] would have to increase by 3.5% in order to take another 1% in sales tax off of groceries. Where we are now, is that revenue only increased by around 2% for the last school year, that is for the 2023 fiscal year. Therefore, the argument is that there is not adequate revenue in the Education Trust Fund to further reduce the grocery tax for the 2024 year.”
Gundlach said the current tax makes a difference for families across the state. Using data from the USDA, Alabama Arise estimated last year that the once-cent reduction could save a family of four about $150 a year.
“It’s about the equivalent to an extra week's worth of groceries. We're really talking [about] state sales tax on groceries,” she said. “We know that when we go to the grocery store, we pay about ten cents in sales tax on the groceries. Most of that is local taxes. It goes to the cities and to the counties, and that funding is not affected by [the] bill that was passed last year.”
The current state sales tax leaves the Yellowhammer State as one of 13 states that still tax groceries. The tax has been in place since 1939. The cost, combined with local levies, can add up to ten percent to grocery bills in Alabama.
Gundlach said Alabama is one of the states that has the highest taxes in the nation, and that takes a toll on the state’s population.
“Overall, when we count both state and local taxes, the people who don't have a lot of money spend it pretty quickly on necessities, and they're going to pay sales taxes on almost all of them,” Gundlach explained. “We also have a very flat income tax structure. Almost everybody in the state pays about 5% of their income in income taxes. And [Alabama has] one of the lowest property tax rates in the nation. So, what that really means is we have a tax structure that taxes ordinary folks the most and the rich the least.”
Gundlach said people across the state of Alabama could use the relief of further reducing the cost on groceries, especially as food is not a luxury but a necessity.
“Most states don't tax groceries at all, and other states only tax groceries at a much lower rate than they do [on] either goods or services,” she said. “People have to eat. People have to buy groceries. If there's a single essential that people have to spend their money on, it’s on the food they put on the table.”
Gundlach encourages any Alabamian concerned about not having the state sales tax on groceries reduced further, while at the same time, seeing dollars for public education transferred to private schools, to reach out to their local lawmakers.
“Let your legislator know that we really think this is a mistake on the part of the legislature to not further reduce the grocery tax. While at the same time, we are giving a tax break to people whose kids can go to private schools,” she said. “So, I would really encourage the general public, if you're concerned about this, to [go] to your legislator.”
Click here to find contact information for Alabama State Representatives and Senators.
