Retail Report | Alabama Retail Association

Bill to Apply CPI to Tax-Free Holidays Sails Through Committee, Scheduled for House Vote

On Wednesday, Rep. Joe Lovvorn’s, R-Auburn, bill to adjust the caps on goods exempt from sales tax during Alabama’s two annual sales tax holidays passed the House Way and Means Education Committee unanimously. The bill is scheduled to be voted on by the full house Tuesday, March 4.

HB315, endorsed by the Alabama Retail Association, proposes to raise the exemption limits based on the Consumer Price Index (CPI) for the 2026 calendar year and every five years thereafter. The current thresholds were established in 2006.

If passed, the back-to-school tax holiday thresholds would increase to $156 for clothing, $78 for supplies, $47 for books and $1,173 for the covered electronics. The severe weather preparedness tax holiday thresholds would increase to $82 for supplies and $1,374 for generators. Sen. Kirk Hatcher, D- Montgomery, has introduced SB209 as the Senate companion bill.

Contact your representative and let them know that you support HB315 and SB209.

Business License Tax Determinations May Soon be Appealable to Tax Tribunal

Sen. Clyde Chambliss, R-Prattville, has introduced legislation that allows businesses to appeal decisions related to business license taxes made by counties and municipalities to the Alabama Tax Tribunal. Sen. Chambliss explained that this right to appeal would enable business owners to challenge these determinations without the need to hire a lawyer or file claims in court. The bill also requires local governments to report information such as classifications and schedules for business license taxes to the Department of Revenue annually.

SB174 was amended and received a favorable report from the Senate County and Municipal Government Committee on Tuesday.

Labor Broker Bill Amended and Passed by Committee

The House Judiciary Committee gave approval to an amended HB302, introduced by Rep. Ben Robbins, R-Sylacauga. The bill establishes regulations for labor brokers, requiring them to register with the Department of Workforce and comply with E-Verify protocols. The amended bill offers protection to business entities and employers who unknowingly hire employees who are not properly verified by labor brokers. Rep. Robbins has collaborated with the Alabama Retail Association and other members of the business community to reduce compliance burdens for small businesses.

Intoxicating Hemp Reform Stalls in Committee

Sen. Tim Melson’s, R-Florence, bill to ban hemp-derived THC products and classify psychoactive cannabinoids as Schedule I controlled substances was carried over in the Senate Healthcare Committee on Wednesday. A substitute was offered, but committee members requested additional time to review its components prior to voting. Although the revisions have not yet been posted on the Alabama Legislature’s website, Sen. Melson discussed some notable changes included in the substitute:

Products such as delta-8, delta-9, and delta-10 products would remain legal.
An additional 6% tax would be imposed.
Sales would be restricted to individuals aged 21 and older, and products must be kept “out of reach of children” in retail establishments.
Retailers who sell delta products to minors would face fines of $1,500 for the first offense, $2,500 for the second, and $5,000 for the third. On the fourth offense, retailers would lose their license to sell any “age-restricted products,” such as tobacco, alcohol, or delta products.
All products must be manufactured in Alabama and undergo testing.

Spirit Infused Beverage Legislation Introduced

Sen. Bobby Singleton, D-Greensboro, has introduced legislation to permit the sale of spirit infused beverages by retailers who obtain a license. Currently, these beverages are distributed exclusively by the Alcoholic Beverage Control Board, and retail sales are restricted to ABC stores and package stores.

Sen. Singleton’s bill stipulates that these beverages must not exceed 16 ounces in size or contain more than 7 percent alcohol by volume. The proposed limited spirit retail license, which would allow for both on-premises and off-premises consumption, is set to cost $150. License holders would only be permitted to advertise and display spirit infused beverages adjacent to beer and wine.

Bill Introduced to Exclude Local Delivery Services from SSUT

Rep. James Lomax, R-Huntsville, has introduced HB364 to exclude local delivery services from the definition of marketplace facilitators, making them subject to state and local sales and use taxes. Currently, these delivery services, which transport goods for Alabama retail sellers such as restaurants, grocery stores, and pharmacies using personal methods of transportation, fall under the state’s online sales tax structure known as the Simplified Sellers Use Tax (SSUT). The SSUT has a tax rate of 8%, which is lower than other sales and use taxes. Several mayors in Alabama have expressed concerns that these delivery services are threatening city revenues, you can read more here.