Retail Report | Alabama Retail Association

Increase In Sales Tax Holiday Caps Headed to Governor
A bill to adjust the exemption limits for goods during Alabama’s two annual sales tax holidays has successfully passed the Senate and is now on its way to the Governor for signature. Supported by the Alabama Retail Association, HB315 seeks to raise the exemption limits based on the Consumer Price Index (CPI) for the 2026 calendar year and every five years thereafter.

The legislation, sponsored by Rep. Joe Lovvorn (R-Auburn) and Sen. Kirk Hatcher (D-Montgomery), received unanimous approval from both chambers of the legislature and was further backed by 85 co-sponsors.

Senate Committee Advances Tax Cut Bills
The Senate Finance and Taxation Education Committee gave approval to a package of bills aimed at reducing taxes. These bills originated in the House; however, the Senate made some changes.

HB386 reduces the state sales and use tax rate on groceries from 3% to 2%, effective September 1, 2025. The bill was substituted to add language from what was HB387 to give local municipalities the authority to lower their local sales tax on groceries by resolution or ordinance and without legislative approval.
HB387, which previously dealt with municipalities, was substituted to reduce the sales and use tax on machinery from 1.5% to 1.25%.
HB388 increases the exemption amount for taxable retirement income for individuals aged 65 or older from $6,000 to $12,000. The bill was substituted to apply a phased in approach to the exemption amounts. The bill was amended to phase in the reduction by $2,000 per year over three years.
HB389 increases the optional standard deduction and expands the adjusted gross income range at which the state imposes individual income taxes.

All bills received a favorable report. Sen. Arthur Orr, R-Decatur, chair of the Committee, called the bills approved a “work in progress” and told members to bring potential amendments before the legislation reaches the Senate floor next week.

Propane Bill Stalls in Committee
Senator April Weaver, R-Alabaster, introduced legislation 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 following an incident that took place in Centreville. SB320 was amended and carried over by the Senate County and Municipal Government Committee on Tuesday.

Although the bill will not be passed during this session, after working with ARA, Senator 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.

Business License Tax Determinations May Soon be Appealable to Tax Tribunal
Legislation to allow businesses to appeal decisions related to business license taxes made by counties and municipalities to the Alabama Tax Tribunal received unanimous support in the House. SB174 requires local governments to report key information, such as classifications and schedules for business license taxes, to the Department of Revenue annually. It outlines the appeals process, allowing taxpayers to appeal without having to prepay taxes while eliminating filing fees. The bill also 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. Sen. Clyde Chambliss’s, R-Prattville, bill now awaits the Governor’s Signature.

Wire Transfer Bill Passes House
The House approved HB297, sponsored by Rep. Jennifer Fiddler, R-Fairhope, which lowers the thresholds for money transmitting companies to report suspicious transactions to the Alabama Securities Commission. The bill underwent significant amendments in committee and removed the previous 4% fee on international wire transfers originating from Alabama.

Currently, federal law requires any wire transfer of $3,000 or more to comply with reporting requirements, which is the same threshold that Alabama has used. However, under Fiddler’s bill, this threshold will be reduced to $1,000. The legislation imposes penalties, including fines of up to $5,000 per violation. The bill will now travel to the Senate for consideration.

Data Privacy Bill Unlikely to Reach Finish Line This Session
A public hearing was conducted by the Senate Fiscal Responsibility and Economic Development Committee regarding a bill that grants consumers various rights related to the collection of their personal data. Sponsored by Rep. Mike Shaw, R-Vestavia Hills, HB283 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 Committee did not vote on the bill, and it is unlikely to receive any further consideration during this session. The sponsor plans to reintroduce the legislation next year.

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