Two Alabama laws go into effect September 1 that may impact your sales and tax collection process.

Act 2025-305 – Grocery Sales Tax Reduction
Reduces the state sales and use tax rate (SSUT) on groceries from 3% to 2% and authorizes local municipalities to lower their local sales tax on groceries by resolution or ordinance.

Act 2025-304 – Tax Exemptions for Certain Baby and Female Items
Exempts the purchase of certain baby supplies, baby formula, maternity clothing, and menstrual hygiene products for personal use from the state’s 4% sales tax. The exemption applies to baby formula, baby bottles, baby wipes, breast milk pumping equipment, diapers, and more. An exhaustive list of exempt products can be found here.

Please ensure your point-of-sale systems and staff training are updated to reflect these changes.

For more information on these laws, visit the Alabama Department of Revenue’s website or email STExemptionUnit@revenue.alabama.gov.