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Sunday, November 15, 2026Nov 15

Sales tax on groceries drops in Alabama in September; Tennessee removes grocery tax in August for three months

Alabama Gov. Kay Ivey this week signed legislation to reduce Alabama’s sales tax on groceries.

The tax cut will reduce the state’s 4% tax on groceries to 3% on Sept. 1. The tax will drop to 2% on Sept. 1, 2024, but only if tax collections to the Education Trust Fund are projected to rise at least 3.5% to offset the loss. If the growth requirement isn’t met, it would be reduced to 2% in the next year that the growth requirement is satisfied.

“As Alabamians and Americans alike are grappling with tighter times, I am hopeful that this decision by the Legislature to slightly reduce the sales tax on certain food items will be truly felt by Alabama families,” Ivey said in a statement.

Alabama is one of only three states that tax groceries at the same rate as other purchases. Advocates had long argued that taxing food at such a rate placed an unfair burden on families in the poor Southern state, where 16% of the people live in poverty and the median household income hovers around $54,000.

Although Tennessee has a higher state sales tax rate on food at 4%, Tennessee’s tax on most non-prepared foods is below the 7% state tax on other purchases.