As Alabama lawmakers wrapped up their 2025 regular session, a wave of legislation emerged with direct implications for retailers across the state. From tax reforms designed to ease the burden on consumers and businesses, to modern updates in labor, pharmacy, data privacy, alcohol and tobacco law, this year’s session brought a mix of challenges and opportunities for the retail community. Here’s a look at the most impactful measures, as tracked by the Alabama Retail Association (ARA).
HB315 – Enacted
Sponsors: Rep. Joe Lovvorn (R-Auburn) | Sen. Kirk Hatcher (D-Montgomery)
Adjusts the exemption limits for goods during Alabama’s back-to-school and severe weather preparedness tax holidays. The ARA-backed HB315 raises the exemption limits based on the Consumer Price Index (CPI) for the 2026 calendar year and every five years thereafter. To see the adjusted limits, click here.
Effective October 1, 2025
HB386 – Enacted
Sponsors: Rep. Danny Garrett (R-Trussville) | Sen. Arthur Orr (R-Decatur)
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.
Effective September 1, 2025
HB152 – Enacted
Sponsors: Rep. Neil Rafferty (D-Birmingham) | Sen. Arthur Orr (R-Decatur)
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 would apply to baby formula, baby bottles, baby wipes, breast milk pumping equipment, diapers, and more. The Alabama Department of Revenue is tasked with adopting rules and developing any tax forms, directions and worksheets.
Effective September 1, 2025
HB387 – Not Enacted
Sponsors: Rep. Danny Garrett (R-Trussville) | Sen. Arthur Orr (R-Decatur)
Proposed to reduce the sales and use tax on machinery from 1.5% to 1.25%.
HB388 – Not Enacted
Sponsors: Rep. Danny Garrett (R-Trussville) | Sen. Arthur Orr (R-Decatur)
Proposed to increase the exemption amount for taxable retirement income for individuals aged 65 or older from $6,000 to $12,000.
HB389 – Not Enacted
Sponsors: Rep. Danny Garrett (R-Trussville) | Sen. Arthur Orr (R-Decatur)
Sought to increase the optional standard deduction and expand the adjusted gross income range at which the state imposes individual income taxes.
HB467 – Not Enacted
Sponsor: Rep. Anthony Daniels (D-Huntsville)
Sought to extend the State’s overtime tax cuts that passed in 2023. The current tax exemption for overtime pay will expire in June 2025.
HB36 – Not Enacted
Sponsor: Rep. Chris England (D-Tuscaloosa)
Sought to increase the SSUT rate from 8% to 9.25%.
HB364 – Not Enacted
Sponsor: Rep. James Lomax (R-Huntsville)
Sought to exclude local delivery services from the definition of marketplace facilitators, making them subject to state and local sales and use taxes. These delivery services currently fall under the state’s online sales tax structure, which is lower than other sales and use taxes. Several Alabama mayors have expressed concerns that these delivery services are threatening city revenues – expect the legislation to be reintroduced in future sessions.
SB107 – Not Enacted
Sponsor: Sen. David Sessions (R-Grand Bay)
Proposed that for SSUT distribution, the population of a municipality be adjusted every five years following the release of the federal decennial census.
HB277 – Not Enacted
Sponsor: Rep. Ernie Yarbrough (R-Trinity)
Proposed the establishment of a 2A sales tax holiday that would take place annually from Memorial Day to the Fourth of July. During this period, the gross proceeds from the sale of ammunition, firearms, and hunting supplies would be exempt from SSUT.
SB86 – Enacted
Sponsors: Sen. Arthur Orr (R-Decatur) | Rep. Neil Rafferty (D-Birmingham)
Enables independent contractors to have portable benefit accounts that facilitate provisions of health insurance and retirement benefits between various contract jobs. ARA worked with bill sponsors to ensure companies who contribute to independent benefit plans are not exposed to liability under the Alabama Workers’ Compensation Act.
Effective December 31, 2025
HB302 – Not Enacted
Sponsor: Rep. Ben Robbins (R-Sylacauga)
Proposed to establish regulations for labor brokers and staffing agencies, requiring them to register with the Department of Workforce and comply with E-Verify protocols. The bill offered protection to business entities and employers who unknowingly hired employees not properly verified by labor brokers.
HB291– Not Enacted
Sponsor: Rep. Neil Rafferty (D-Birmingham)
Sought to repeal the Alabama Uniform Minimum Wage and Right-to-Work Act. This 2016 Act, which was supported by the ARA, prevents local governments from establishing minimum wages higher than the federal minimum wage and forbids local governments from implementing requirements for paid or unpaid leave, vacation time, or work schedules. The law further prohibits local governments from requiring employers to grant organizing concessions to unions in exchange for assistance with development projects, a practice known as labor peace agreements.
HB20 – Not Enacted
Sponsor: Rep. Juandalynn Givan (D-Birmingham)
Proposed to make it unlawful to deny an individual full and equal enjoyment of public accommodations or to discriminate against an applicant or employee based upon the individual’s weight or body size.
HB21 – Not Enacted
Sponsor: Rep. Juandalynn Givan (D-Birmingham)
Sought to codify federal requirements into state law for expressing breast milk while on the job.
HB139 – Not Enacted
Sponsor: Rep. Rolanda Hollis (D-Birmingham)
Proposed to make it unlawful for a person to deny any individual full and equal enjoyment of public accommodations, such as stores, because of their race, religion, sex, age, disability, or national origin.
SB252 – Enacted
Sponsors: Sen. Billy Beasley (D-Clayton) | Rep. Phillip Rigsby (R-Huntsville)
Requires pharmacy benefit managers (PBMs) to reimburse independent pharmacies the amount paid by the Alabama Medicaid Agency, which is $10.64 per prescription, in addition to the acquisition cost of the drug.
Effective immediately, with specific provisions for independent pharmacies and PBMs set to begin on October 1, 2025
HB123 – Enacted
Sponsors: Rep. Kerry (Bubba) Underwood (R-Tuscumbia) | Sen. Keith Kelley (R-Weaver)
Sunset bill addressing reforms and oversight for the Alabama Board of Pharmacy. Extends the Board’s existence until October 1, 2026, expands the membership and clarifies its authority to impose fines.
Effective Immediately
HB278 – Not Enacted
Sponsor: Rep. Phillip Rigsby (R-Huntsville)
Would authorize a physician, physician assistant, or nurse practitioner to provide a pharmacist with a standing order approved by the State Board of Pharmacy to dispense ivermectin to individuals without a prescription.
SB174 – Enacted
Sponsor: Sen. Clyde Chambliss (R-Prattville) | Rep. Paul Lee (R-Dothan)
Allows businesses to appeal decisions related to business license taxes made by counties and municipalities to the Alabama Tax Tribunal. Requires local governments to report key information, such as classifications and schedules for business license taxes, to the Department of Revenue annually. Outlines the appeals process and permits appeals to be filed in the Circuit Court of Montgomery County for those taxpayers who do not have a principal place of business in Alabama.
Effective October 1, 2025
SB186 – Enacted
Sponsor: Sen. Clyde Chambliss (R-Prattville) | Rep. Chris Sells (R-Greenville)
Requires that certain internet-enabled devices, including smartphones and tablets, manufactured on or after June 1, 2025, contain an adult content filter that is enabled during the device’s activation. Devices activated in Alabama must ask the user to provide their age during activation and account setup. The law specifically includes a provision stating the Act does not create a cause of action against a retailer of a device.
Effective October 1, 2025
SB12 – Not Enacted
Sponsor: Sen. Chris Elliot (R-Josephine)
Proposed to prohibit any state or local agency from requiring, as a prerequisite to award a license or permit, a different license or permit from another entity. It would not pertain to state occupational licensing boards such as the boards of pharmacy or nursing.
SB29 – Not Enacted
Sponsor: Sen. Chris Elliot (R-Josephine)
Sought to require state and local governmental bodies to approve or deny permits within 45 days of receiving applications.
SB320 – Not Enacted
Sponsor: Sen. April Weaver (R-Alabaster)
Proposed to prevent permit holders of the Alabama Liquefied Petroleum Gas Board from filling or storing LP-Gas cylinders for retail sale within 3,000 feet of schools, churches, hospitals, athletic fields, or other places where the public gathers. After working with ARA, Sen. Weaver expressed a desire to include an amendment clarifying that the bill does not apply to retailers who sell propane tanks for personal use. She also indicated her intention to prefile the amended version of the bill for the next legislative session.
HB283 – Not Enacted
Sponsor: Rep. Mike Shaw (R-Vestavia Hills)
Would allow consumers to confirm whether their data is being processed, correct inaccuracies, delete their data, obtain a copy of their data, and opt out of data processing for targeted advertising, data sales, and profiling. The sponsor plans to reintroduce the legislation next year.
HB297 – Not Enacted
Sponsor: Rep. Jennifer Fidler (R-Fairhope)
Sought to lower the thresholds for money transmitting companies to report suspicious transactions to the Alabama Securities Commission from $3,000 to $1,000. The bill underwent significant amendments throughout the session which removed the previous 4% fee on international wire transfers originating from Alabama.
HB516 – Not Enacted
Sponsor: Rep. Prince Chestnut (D-Selma)
Proposed to make it unlawful to use computers, such as chatbots or artificial intelligence, to mislead consumers into believing they are interacting with a human.
HB579 – Not Enacted
Sponsor: Rep. Mack Butler (R-Rainbow City)
Would require the Alabama Department of Human Resources to request a waiver from USDA to exclude soda from the Supplemental Nutrition Assistance Program (SNAP).
HB8 – Enacted
Sponsors: Rep. Barbara Drummond (D-Mobile) | Sen. David Sessions (R-Grand Bay)
Expands the regulation of tobacco and electronic nicotine systems by the Alcoholic Beverage Control Board and increase the age to purchase vaping products from 19 to 21. Increases penalties for violation of tobacco retail laws and requires retailers of electronic delivery systems to display new signage warning of the dangers of vaping devices. Grocery stores and convenience stores are permitted to sell these products under new regulations. ARA secured an amendment to ensure that seeds or seed-derived ingredients generally recognized as safe by the United States Food and Drug Administration—such as hemp milk and hemp seeds—are excluded from the requirements of this bill.
Effective June 1, 2025
HB445 – Enacted
Sponsors: Rep. Andy Whitt (R-Ardmore) | Sen. Tim Melson
Authorizes the Alcohol Beverage Control Board to regulate all consumable hemp products by licensing manufacturers, wholesale distributors and retailers. Restricts sales to 21 and over, prohibits inhalable products or smokable flower, and restricts serving sizes. It also limits retail establishments that sell consumable hemp products to existing liquor stores or other locations that minors may not access. An exception was added to allow “retail food store” to sell hemp-infused beverage products as long as at least 75% of the store’s selling area, with a minimum of 14,000 square feet, is dedicated to food items.
Effective July 1, 2025
HB357 – Pending Signature
Sponsor: Rep. Rolanda Hollis (D-Birmingham) | Sen. Tim Melson (R-Florence)
Broadens the definition of “cigarette” to include heated tobacco products and establishes a tax rate of $0.017 per single-use consumable unit.
If Signed, Effective November 1, 2025
HB521 – Not Enacted
Sponsor: Rep. Craig Lipscomb
Proposed to allow ready-to-drink spirits to be sold alongside beer and wine in grocery stores and gas stations. Defined a new category of “mixed spirit beverages,” established a licensing structure for distribution, and proposed a tax of 3.5 cents per ounce. Stipulated that the single-serve beverages could not contain more than 7% alcohol by volume.
SB10 – Not Enacted
Sponsor: Sen. Gerald Allen (R-Cottondale)
Proposed to prohibit the smoking of electronic nicotine delivery systems in the same locations that the smoking of tobacco products is currently prohibited.
With many of these bills poised to shape the business environment for years to come, staying informed and engaged is more important than ever. The Alabama Retail Association will continue to advocate for pro-retail policies and keep you updated on implementation timelines, regulatory changes, and opportunities to make your voice heard.
If there are specific policies or regulations you’d like us to track or work to change, we’d love to hear from you. Your input helps shape our advocacy efforts and ensures we’re focused on the issues that matter most to our members. Please email Alison Hosp with your policy priorities or areas of concern.
Together, we can ensure Alabama remains a great place to do business.