HB 386 Alabama House · 2025 Regular Session

Sales and use tax on food, state rate reduced, counties and municipalities authorized to reduce

House Bill 386 proposes to reduce the state sales and use tax rate applied to food purchases. Specifically, it would lower the state tax rate on food to three percent. The bill also authorizes individual counties and municipalities to reduce their own local sales tax rates on food if they choose to do so. These changes are scheduled to take effect on September 1, 2025, potentially affecting consumers' grocery costs and local government revenue.

Issues: ✓ Budget & Taxes

Bill status signed all 5 stages cleared

Introduction

Mar 2025

Committee Review

Apr 2025

House Passage

May 2025

Senate Passage

May 2025

Signed into Law

May 2025

Introduced Mar 5, 2025 Signed May 12, 2025

Maddy AI version diff · 2 comparisons

What changed between versions

Engrossed → Enrolled · 5 edits · May 12, 2025

MODERATE

The bill was finalized as Enrolled and includes substantive policy changes to Alabama's sales tax structure. The primary changes involve expanding the list of amended tax sections to include new provisions for local governments and clarifying rules on trade-ins for vehicles and batteries. Additionally, the text was corrected to ensure consistency in how tax exemptions apply to educational institutions.

Scope change

The bill's scope was expanded to explicitly authorize county and municipal governing bodies to reduce their sales tax on food without restrictions on the rate cut amount or growth requirements, and to amend additional tax sections (40-23-40 and 40-23-62) that were not previously listed.

SCOPE

Added authorization for local governments to reduce sales tax on food without specific limits on the rate reduction or growth requirements.

Expanded the list of amended Code sections to include 40-23-40 and 40-23-62, broadening the bill's legislative reach.

DEFINITION

Added a specific exclusion for batteries in the trade-in tax calculation for vehicles and trailers.

Clarified the definition of institutions of higher learning to explicitly include 'instrumentality of the institutions'.

REQUIREMENT

Minor formatting corrections were made to ensure consistent punctuation and phrasing in the tax rate descriptions.

Floor votes

How they voted

This bill passed the Senate by voice vote (no roll call recorded).

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

May 6, 2025

Lower · Passed

Garrett Concur In and Adopt - Adopted Roll Call 1193

lower

May 6, 2025

Upper · Passed

Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 976

upper

May 6, 2025

Upper · Passed

Orr motion to Adopt - Adopted Roll Call 975

upper

May 6, 2025

Introduced

Orr 1st Amendment Offered

upper

May 6, 2025

Upper · Passed

Jones motion to Adopt - Adopted Roll Call 974

upper

May 6, 2025

Introduced

Finance and Taxation Education 1st Substitute Offered (Finance and Taxation Education)

upper

Apr 30, 2025

Upper · Passed

Reported Out of Committee Second House

upper

Apr 24, 2025

Upper · Passed

Pending Committee Action in Second House (Finance and Taxation Education)

upper

Mar 18, 2025

Lower · Passed

Motion to Add Cosponsor - Adopted Roll Call 412

lower

Mar 18, 2025

Lower · Passed

Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 411

lower

Mar 18, 2025

Lower · Passed

Motion to Adopt - Adopted Roll Call 410

lower

Mar 18, 2025

Introduced

Ways and Means Education Engrossed Substitute Offered (Ways and Means Education)

lower

Mar 6, 2025

Lower · Passed

Reported Out of Committee House of Origin (Ways and Means Education)

lower

Mar 6, 2025

Introduced

Ways and Means Education 1st Amendment (Ways and Means Education)

lower

Mar 5, 2025

Lower · Passed

Pending Committee Action in House of Origin (Ways and Means Education)

lower

1 primary · 0 co-sponsors