Lawmakers look at impact of Alabama grocery tax reduction

MONTGOMERY, Ala. (WSFA) - A commission of lawmakers met for the first time Tuesday to study the impact of the state grocery tax reduction.

Alabamians have enjoyed cheaper groceries for two months now after the state’s grocery tax dropped from 4% to 3% in September.

Sales tax revenue makes up 25% of Alabama’s Education Trust Fund which now may be losing money.

“October 2023 ETF receipts were down by $74 million. That’s also not alarming to me simply because October 2022 was up by just about the same amount,” said Kirk Fulford with Alabama’s Legislative Services Agency.

A commission of industry experts charged with monitoring the grocery tax reduction doesn’t have a negative outlook on the decrease in sales tax either.

“There’s not much we can take from month one, but I am excited to see that we are going, projections, in a good way for one month,” said Rep. Penni McClammy, D-Montgomery County.

If there is 3.5% growth in the Education Budget, the grocery tax will continue to drop to 2% next year, and finally, a complete elimination of the state’s sales tax by 2026.

“That would save a family of four over $576 a year, or two weeks’ worth of groceries. And that would make a big difference,” said Wade Payne with the Alabama Grocers Association.

Lawmakers are hopeful the education trust fund will grow, and the grocery tax will continue to drop.

“I’m just excited that we’re continuing to take gradual steps toward a day when there’s no grocery tax in Alabama,” said Sen. Andrew Jones, R-Cherokee County.

Lawmakers expect the next ETF numbers to be available by the start of the legislative session in the spring.

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