September starts this Sunday. One difference Alabama shoppers will see is no extra cut in the State’s sales tax on groceries. The Department of Revenue in Montgomery says the tax on food will stay at three percent starting September first. There was a one percent cut in the food tax that funds education. There wasn’t a three and a half percent revenue increase this year. 2024 saw only a one a half percent hike, so the grocery tax will stay as is until maybe September of 2025. The advocacy group Alabama Arise says lawmakers should find another revenue source for schools.
The news website Kiplinger quotes the Census Bureau’s ongoing Household Pulse Survey that some eighteen million respondents say their household ‘sometimes’ didn’t have enough to eat within the last seven days. That report comes from June. Data on food sufficiency also shows close to seventy million Americans reported their household had enough food — but not always the kind they wanted.
Alabama is among a dozen States that still taxes food. Our State passed legislation that would reduce Alabama's grocery tax by 2%. The first 1% cut went into effect last September, reducing the state's tax rate from 4% to 3%. As APR reported, no hike starting on Sunday due to a low increase in tax revenues for schools.
Arkansas, Idaho, Illinois, Kansas, Missouri, Oklahoma, South Dakota, Tennessee, and Utah reportedly have grocery taxes. Hawaii technically uses an excise tax on groceries. And, Mississippi leads the nation with a food tax of seven percent.
APR news reported on the first grocery tax cut back in September of 2023.
Back then, APR listeners heard from Chris Sanders is the Communications Director for the nonprofit Alabama Arise. He spoke with Alabama Public Radio back when the state legislature signed off on the legislation. Sanders said this cut will increase in value as grocery prices continue to rise across the nation.
“This bill's passage is a win for every Alabamian, and this grocery tax reduction will benefit every single person across Alabama,” he said. “It will make it easier for people to make ends meet and to provide for their families. This is a big step towards righting the wrongs of our state’s upside down tax system.”
Sanders said he supports eliminating the grocery tax entirely and is encouraged by the progress this bill is making towards that goal.
“If you think about the grocery tax, it's a tax on survival,” he said. “Food is not optional. We all have to eat to live. It's not a luxury. It's not a choice. We all have to buy food. We all have to have food to live, and taxing basic necessities of life like that, in my view, is immoral. It’s a bad choice.”
Alabama Arise has held listening sessions this summer with communities who could be impacted by the grocery sales tax and its potential reduction. Sanders said the grocery tax is making it much harder on people to make ends meet and that the rising prices of groceries makes a tax deduction even more necessary for struggling families.
“History tells us that over the course of decades, prices on food and on everything else tend to go up,” he said. “This grocery tax cut is only going to continue to grow in value and meaning as prices continue to increase through the years and through the decades. We're really glad that this is on the books now.”
Using data from the USDA, those with Alabama Arise estimate the 1-cent reduction could save a family of four about $150 a year.
