As lawmakers approach the halfway mark of the 2026 Regular Session, issues directly affecting Alabama retailers continue to take shape. Below is a recap of the latest developments.

Bill to Remove Swipe Fees from Sales and Use Tax Calculations Carried Over
SB221 by Sen. Arthur Orr, R-Decatur, was carried over on Thursday after being placed on the Senate’s Special Order Calendar and debated at length. The discussion, primarily between Sen. Orr and Sen. Rodger Smitherman, D-Birmingham, focused on concerns about potential revenue losses for municipalities if credit and debit card transaction fees are excluded from the amount subject to state sales and use tax. Smitherman referenced a possible amendment to exempt Class 1 municipalities from the bill’s provisions, though no amendment was formally offered and no vote was taken. Sen. Orr ultimately agreed to carry the bill over to allow additional time for discussions.

As introduced, SB221 would exempt credit and debit card transaction fees from the taxable sales price when a retailer passes the fee along to the customer. Under current practice, those fees are included in the total amount subject to sales tax. For example, if an item costs $9.09, at a 10% sales tax rate the retailer collects $0.91 in tax, bringing the total to $10.00. If the merchant then passes along a 3% interchange fee (approximately $0.30), current interpretation requires the retailer to remit 10% sales tax on that additional $0.30 as well, resulting in $0.94 in total tax remitted. SB221 would clarify that such transaction fees should not be included in the taxable sales price.

ARA encourages members to contact their state senator to discuss SB221 and the importance of clear statutory guidance regarding the tax treatment of credit card transaction fees.

Seafood Labeling Bill Approved by Committee and Re-referred
HB444, sponsored by Rep. Chip Brown, R-Mobile, was approved this week by the House Health Committee and re-referred to the House Ways and Means General Fund Committee. The legislation would expand Alabama’s existing seafood country-of-origin labeling requirements for food service establishments.

In addition to maintaining the State Health Officer’s authority to investigate verified complaints, the bill authorizes the Commissioner of Agriculture and Industries to independently and randomly test seafood served by food service establishments to ensure compliance and report violations for enforcement. The measure also updates menu and signage disclosure requirements. Violations would remain subject to a graduated penalty structure, and establishments found in violation would see a five-point reduction in their posted health sanitation score during the scoring period. Establishments that unknowingly violate the law based on a supplier’s attestation of origin would be held harmless.

Retail Restroom Access Bill Filed in House
HB478, introduced by Rep. Reed Ingram, R-Matthews, would require retail establishments with employee-only restroom facilities to grant access to customers with certain qualifying medical conditions—such as Crohn’s disease, ulcerative colitis, irritable bowel syndrome, or other conditions requiring immediate restroom use—when a public restroom is not readily available. Customers must present medical documentation or an approved identification card, and access is not required if doing so would create a health, safety, or security risk. The bill does not mandate any physical modifications to employee restrooms and limits a retailer’s liability to that owed to a licensee; however, refusal to comply could result in a misdemeanor fine of up to $100. The act would take effect October 1, 2026.

Franchisee Religious Observation Bill Advances
Following Senate passage last week, the House Commerce and Small Business Committee amended and advanced SB138, sponsored by Sen. Dan Roberts, R-Birmingham. The bill would prohibit a franchisor from requiring a franchisee to operate on a day that conflicts with the franchisee’s sincerely held religious beliefs, except in limited circumstances.

Sen. Roberts shared with committee members that he introduced the legislation after being contacted by a constituent whose bakery franchise was purchased by a private equity firm and was later informed that it would be required to open on Sundays, a day the business had historically remained closed for religious reasons.

Bill Prioritizing Restitution Payments Introduced
Under existing law, courts must order a defendant to pay restitution when a criminal conviction results in pecuniary loss to a victim. HB481, introduced by Rep. Chris England, D-Tuscaloosa, would prioritize those payments by requiring that restitution be paid and collected before any other fines, court costs, or fees associated with the case.

In the retail context, this change would apply to restitution ordered in shoplifting cases, helping ensure that businesses are reimbursed for stolen merchandise or related losses before other financial penalties are satisfied.

Consumer Protection Bill Signed into Law
Legislation establishing new consumer protection requirements for mobile app stores and app developers related to age verification and parental consent for minors was signed into law this week by Governor Kay Ivey.

Act 2026-59 requires app store providers to verify users’ ages using commercially available methods and, for minors, to link accounts to a parent or guardian and obtain parental consent for downloads and purchases. The Alabama Retail Association worked with the bill sponsors, Rep. Chris Sells, R-Greenville, and Sen. Clyde Chambliss, R-Prattville, to minimize the impact on retailers selling through mobile apps by securing an amendment clarifying that “in-app purchase” applies only to virtual currency, digital goods, digital services, or other apps, and does not include tangible goods. The law takes effect January 1, 2027.

Board of Pharmacy Sunset Extension Ready for Governor’s Signature
Sen. Keith Kelley, R-Anniston, and Rep. Kerry Underwood, R-Tuscumbia, sponsored SB100 to extend the Alabama State Board of Pharmacy until October 1, 2027, and revise the appointing authority for one at-large board member. The measure received final approval by the House this week. The board’s reauthorization follows prior legislative scrutiny, including audit findings and sunset review discussions, and reflects lawmakers’ continued focus on oversight and accountability while largely maintaining the status quo. The bill now awaits the Governor’s signature.

Alcohol Importing Bill Clears Committee
Sen. Kirk Hatcher (D-Montgomery) introduced SB287 to update Alabama’s alcoholic beverage laws, and the measure received a favorable report from the Senate Tourism Committee. The bill clarifies that a licensed importer may bring into the state alcoholic beverages manufactured anywhere outside of Alabama. Current law references products manufactured outside of the United States, and this bill formally recognizes importers’ authority to distribute domestically produced beverages made outside Alabama to the ABC Board or to licensed wholesalers.

The legislation also aligns the importer license year with other ABC license categories by changing it from January 1 to October 1. If enacted, the act would take effect October 1, 2026.

SSUT Distribution Changes Proposed
As discussions around Alabama’s Simplified Sellers Use Tax (SSUT) continue following the withdrawal of litigation and the postponement of retaliatory bills, additional legislation has been introduced addressing how SSUT revenues are distributed. HB480, sponsored by Rep. Chris England, D-Tuscaloosa, would further revise the SSUT distribution formula by adjusting the percentages allocated to the State General Fund and Education Trust Fund and requiring counties and municipalities to distribute at least 40 percent of their SSUT proceeds to the local boards of education serving their jurisdictions, unless a resolution or ordinance providing for such distributions is adopted before October 1, 2027. The bill would also shift distributions to a monthly schedule and repeal an existing code section related to SSUT distributions.