Lawmakers pushed through a busy week of activity before heading into next week’s spring break. The Legislature will reconvene on March 31, with the next edition of the Capitol Retail Report set for April 3.

Cash Rounding Bill Gains Momentum (and a Few Puns Along the Way)
Legislation to authorize the rounding of in-person cash transactions to the nearest five cents passed the House this week with overwhelming support. Rep. Norman Crow’s, R-Tuscaloosa, first bill, HB545, drew a lighthearted debate, with members offering plenty of puns, noting the proposal “just makes cents” and adding their own “two cents” to the discussion. Behind the humor, however, was broad recognition of the need for a consistent approach to cash transactions as pennies become increasingly scarce.

The bill would establish a uniform method for rounding final cash totals while leaving product pricing and sales tax calculations unchanged, and would not apply to electronic payments. The Alabama Retail Association supports the measure as a practical solution for both retailers and consumers. A companion bill, SB365 by Sen. Jay Hovey, R-Auburn, also advanced this week, receiving a favorable report from the Senate Banking and Insurance Committee.

Bill to Remove Swipe Fees from Sales and Use Tax Calculations Passes Senate
Legislation to exclude credit and debit card transaction fees from the calculation of sales and use tax passed the Senate this week after previously being carried over for further discussion. Sponsored by Sen. Arthur Orr, R-Decatur, SB221 would clarify that interchange fees passed on to customers are not included in the taxable sales price, addressing concerns with current interpretations that require sales tax to be collected on those fees. The sponsor explained that, unlike tangible goods, services and fees are not considered taxable under current law.

While the bill ultimately passed unanimously, debate remained contentious. Sen. Rodger Smitherman, D-Birmingham, continued to voice concerns about potential revenue losses for municipalities, and an amendment offered by Sen. Robert Stewart, D-Selma, to allow municipalities to opt into the bill’s provisions failed. The measure now moves to the House for consideration.

SNAP Waiver Bill Advances in Committee
Legislation requiring the Alabama Department of Human Resources to seek a federal waiver restricting the purchase of certain candy and soda products with SNAP benefits was taken up again by the House Ways and Means Education Committee this week. The bill, SB57, is now being carried in the House by Rep. Reed Ingram, R-Matthews.

Committee discussion focused largely on the financial impact of implementation, with the fiscal note estimated at $10.6 million for personnel. An amendment was adopted to delay the implementation date to April 2027, contingent upon approval from the U.S. Department of Agriculture. The bill ultimately received a favorable report from the committee, and the sponsor indicated the measure will not be brought to the House floor until outstanding financial concerns are addressed.

Movement on Alcohol-Related Legislation Continues
Lawmakers advanced several alcohol-related measures this week.

The House passed HB395, sponsored by Rep. Andy Whitt, R-Ardmore, which clarifies that the “cost of merchandise” used in calculating the ABC Board’s markup applies only to the amount paid for case lots of liquor, excluding additional charges. The bill was brought in response to a recent ABC rule imposing a credit card transaction fee on wholesalers and retailers, which the sponsor argued could push total charges beyond the statutory markup limit. During floor debate, members discussed potential impacts on ABC Board revenue, while Rep. Whitt emphasized the importance of supporting small, independent retailers operating under Alabama’s alcohol regulatory structure.

Also sponsored by Rep. Whitt, HB593 received a favorable report from the House Economic Development and Tourism Committee. The legislation would broaden the state’s current brewpub law by creating new license categories for small craft distilleries and wineries and allowing a single manufacturer license for combined operations within a contiguous area. Additional provisions would permit tours, tastings, limited off-site sales at public events, and off-site storage extensions under ABC Board oversight. The sponsor noted the bill is intended to support small businesses and boost tourism, and several friendly amendments were adopted at the request of the ABC Board.

In the Senate, SB287 by Sen. Kirk Hatcher, D-Montgomery, passed and now moves to the House for consideration. The bill clarifies that licensed importers may bring alcoholic beverages into Alabama from anywhere outside the state and aligns the importer license year to begin October 1. As amended, the measure also incorporates provisions related to consumable hemp products, including allowing certain retailers to obtain a hemp product retailer license and permitting the sale of hemp-derived beverages in retail food stores under specified conditions.

Overtime Tax Deduction Bill Advances
Legislation to create a temporary individual income tax deduction for overtime compensation was amended and adopted by the House Ways and Means Education Committee this week. HB527, sponsored by Rep. James Lomax, R-Huntsville, would allow taxpayers to deduct up to $1,000 in qualified overtime pay annually for tax years beginning January 1, 2026, through December 31, 2028.

The sponsor noted the proposal differs from the previous overtime tax exemption by providing more targeted relief and including a defined cap, while also modeling a newer federal framework. An amendment was adopted adding a three-year sunset provision before the bill received approval from the committee.

Seafood Labeling Bill Passes House
Legislation to expand Alabama’s seafood country-of-origin labeling requirements for food service establishments was amended and adopted by the House. Sponsored by Rep. Chip Brown, R-Mobile, HB444 would authorize the Commissioner of Agriculture and Industries to conduct random testing of seafood, while maintaining the State Health Officer’s authority to investigate verified complaints.

The bill also updates menu and signage disclosure requirements, retains a graduated penalty structure that includes a five-point reduction in posted health scores for violations, and provides liability protections for establishments that rely on supplier attestations of origin. The House adopted a technical amendment prior to passage, and the measure now moves to the Senate for further consideration.

Local Tax and Fee Notice Bill Advances
Legislation requiring local governments to provide advance notice before adopting or increasing certain taxes and fees received a favorable report from the House County and Municipal Government Committee this week. HB561, sponsored by Rep. Jim Carns, R-Birmingham, would require at least 30 days’ notice and a public hearing prior to the adoption or increase of a local tax or license fee.

The bill was amended to update its effective date before receiving committee approval. Companion bill SB148, sponsored by Sen. Gerald Allen, R-Cottondale, is pending Senate action after being carried over.

Small Business Property Tax Exemption Bill Introduced
Legislation to expand ad valorem tax exemptions for small businesses has been introduced by Rep. Marilyn Lands, D-Huntsville. HB641 would exempt tangible personal property with a market value over $120,000 for businesses with fewer than 50 employees from the state-levied ad valorem tax.

The bill also allows counties and municipalities to adopt similar local exemptions. If enacted, the measure would take effect October 1, 2026.

Optical Aids Tax Exemption Bill Advances
Sponsored by Rep. Mark Shirey, R-Mobile, HB15 would remove the state sales tax on eyeglasses and contact lenses prescribed by a licensed physician or optometrist, while allowing local governments to adopt similar exemptions.

The sponsor noted that Alabama is one of only six states that still taxes optical aids. During committee discussion, Chairman Danny Garrett, R-Trussville, cautioned members that the Legislature will need to be selective in considering future tax exemptions as budget constraints tighten. The House Ways and Means Education Committee gave the measure a favorable report.

Wire Transfer Bill Receives Public Hearing
HB585, sponsored by Rep. Jennifer Fidler, R-Fairhope, received a public hearing in the House Financial Services Committee this week, but no vote was taken. The bill would impose a 1.5 percent fee on outgoing international wire transfers originating in Alabama, with proceeds directed to county sheriffs to help offset costs associated with enforcing immigration laws.

The legislation also includes new reporting requirements for certain transactions and establishes penalties for evasion, while allowing taxpayers to claim an income tax credit for fees paid, up to $5,000 through 2030. During the hearing, members raised concerns regarding the potential economic impact of the proposal and the scope of its enforcement provisions.