The bill amends Sections 40-23-210 and 40-23-230 of the Code of Alabama 1975, requiring the Department of Revenue to adjust the dollar value of certain covered items, such as clothing, computers, and school supplies, based on changes in the Consumer Price Index (CPI). Starting in calendar year 2026, these adjustments will reflect the percentage change in the CPI from December 2006 to December 2024 and will occur every five years thereafter. The bill also increases the advance notice period for local governments to adopt resolutions or ordinances for local sales tax exemptions, as specified in Sections 40-23-213 and 40-23-233. Additionally, it clarifies the definition of "covered items" and excludes certain items like clothing accessories and protective equipment from sales tax exemptions.

Furthermore, the bill establishes a framework for sales tax holidays at the county and municipal levels, allowing local governments to exempt specific covered items from local sales and use taxes during designated periods, such as the third weekend of July and the last weekend of February, provided that resolutions are adopted at least 30 days in advance. It also modifies existing language by changing "paying" to "may" regarding local tax exemptions and specifies the timing for these exemptions more clearly. The act is set to take effect on October 1, 2025.

Statutes affected:
Introduced: 40-23-210, 40-23-230
Enrolled: 40-23-210, 40-23-230