The bill amends the Code of Alabama 1975 to significantly reduce the state sales and use tax rate on food, lowering it from four percent to three percent effective September 1, 2023, and further to two percent on September 1, 2024. It modifies several sections, including 40-23-2, 40-23-40, 40-23-61, and 40-23-62, and introduces a new "two-cent" tax on each dollar of food sales. The bill also removes previous restrictions that required a specific growth rate in the Education Trust Fund for tax reductions to take effect, allowing local governing bodies greater flexibility in adjusting their sales tax rates on food without such conditions.

Additionally, the bill clarifies the definition of "food" for county and municipal sales and use taxes, aligning it with the general sales tax rate in effect as of June 15, 2023. It allows local governments to reduce their sales tax rate on food if their general fund growth exceeds two percent over the previous year, with a requirement for such reductions to be enacted at least 60 days prior to implementation. The bill also eliminates the provision for a future tax rate reduction to two percent after September 30, 2025, and specifies exemptions for certain tangible personal property, ensuring that individuals are liable for tax until it is paid, with certain receipts relieving them of further liability. The act is set to take effect on June 1, 2025.

Statutes affected:
Introduced: 40-23-2, 40-23-61
Engrossed: 40-23-2, 40-23-61
Enrolled: 40-23-2, 40-23-40, 40-23-61, 40-23-62