2023 tax bills include one-time rebate and state’s largest tax cut

Thanks to legislation enacted in the final days of the 2023 regular session, a reduction in the state’s grocery tax eventually will save Alabama shoppers $318 million, more than 3,000 retailers will no longer have to prepay sales taxes and Alabama income taxpayers will get a $150 rebate in December.

State sales tax on SNAP foods to be cut in half

Thousands more small businesses will no longer have to prepay sales taxes under bill

Overtime pay exempt from Alabama income tax in 2024

$150 income tax rebate meant to partially offset grocery sales tax


Expansion of health insurance premiums paid deduction: This legislation gained House approval in late April, but the Senate Finance and Taxation Committee never considered it.

Modest income tax cuts: Two bills sponsored by Rep. Danny Garrett, R-Trussville received House approval but the Senate Finance and Taxation Committee never considered them. HB115 would have lowered the top rate of the state’s income tax from 5% to 4.95% by 2028. HB116 would have eliminated the 2% income tax on the first $500 of earned income for an individual and $1000 for married couples filing jointly.

Sales tax free gun safes: HB375 by Rep. Matt Simpson, R-Daphne, would have exempted gun safes and gun safety devices (including fingerprint scanners and locks) from sales and use taxes. The bill died without Senate action on the final day of the 2023 regular session.

Exclude motor fuel excise taxes from gross receipts’ business licenses: An amended version of SB169 by Sen. Gerald Allen, R-Cottondale, which would have allowed businesses that pay municipal business licenses based on gross receipts to deduct motor fuel excise taxes paid to federal, state and local governments from those receipts, died without House consideration of the 30th day of the 2023 session.

Diaper and menstrual hygiene product exemption: On May 4, Rep. Neil Rafferty, D-Birmingham, and 12 co-sponsors, introduced legislation to exempt the purchase of diapers and menstrual hygiene products from sales and use taxes. The House Ways and Means Education Committee never considered HB438.

Child care tax credit: On May 2, Sen. Garlan Gudger, R-Cullman, introduced legislation that would have created an employer tax credit and child care facility tax credit to incentivize employers to fund child care for their employees. The Senate Finance and Taxation Education Committee never considered SB273.

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