Grocery tax cut bill passes its first hurdle in Alabama House
May 29, 2023
An Alabama House committee Wednesday approved a bill that could cut the state grocery tax in half over several years.
HB 479, sponsored by the House Ways and Means Education chair Danny Garrett, R-Trussville, would reduce the tax rate to 3% on Sept. 1. The tax would be cut down to 2% in subsequent years if revenues in the Education Trust Fund grew by at least 2% annually.
The bill passed on a voice vote. It would not reduce city or county taxes, which are decided locally.
“We’ve taken the current scenario we have with all of our funding,” Garrett said. “We looked at the projected revenue, the budget, the spending, the reserves all that we factored in a mild recession. And we believe that we are confident that we can handle this proposal.”
The cut would apply to food covered by the federal Supplemental Nutrition Assistance Program (SNAP). The Legislative Fiscal Office estimates that reducing the state grocery tax to 2% would cost the ETF $318 million a year, when fully implemented.
Alabama is one of just 13 states that taxes groceries, and one of only three states that taxes groceries fully. With local taxes added, Alabamians can pay up to 10% on grocery bills. Critics have long argued the tax hurts the poor and adds to food insecurity.
Under the bill, a family paying $500 a month in groceries and paying a 10% tax would see their food taxes fall from $600 a year to $540 year when the state tax is cut to 3%. It would fall to $480 a year at a 2% state tax rate.