The bill amends Sections 40-23-210 and 40-23-230 of the Code of Alabama 1975, requiring the Alabama 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). For the calendar year 2026, the adjustments will reflect the percentage change in the CPI from December 2006 to December 2024, with subsequent adjustments occurring every five years. Additionally, the bill increases the timeframe for local governments to pass resolutions or ordinances to adopt exemptions for local sales taxes, ensuring that these exemptions remain relevant in light of inflation.

Furthermore, the bill clarifies the definition of "covered items" under the sales tax law, detailing specific categories and price limits for exemptions, including provisions for noncommercial purchases of school supplies and books. It introduces new provisions for county and municipal sales tax exemptions during designated sales tax holiday periods, allowing exemptions during the third weekend of July and the last weekend of February, contingent upon resolutions being adopted at least 30 days prior. The bill also includes several deletions and insertions to refine the language regarding the timing and conditions of these tax exemptions, such as changing "paying" to "may" and specifying the end time for exemptions as "12:00 midnight." 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