New bills would get rid of state grocery tax

MONTGOMERY, Ala. (WAFF) - A bill introduced in the 2022 Alabama legislative session could save you some money at the grocery store if it’s passed.

House Bill 174 was introduced in the statehouse Jan. 18. and would exempt food sales from sales tax if passed. However, the bill does not offer a way how to make up that lost revenue if it is passed. Grocery taxes give more than $500 million to the state’s education budget.

One of the sponsors of HB174 is also sponsoring House Bill 173. Rep. Mike Holmes says HB173 would limit the amount a person can deduct from their federal income tax to make up for the lost revenue. The bill would set a deduction limit of $4,000 for individuals and $8,000 for couples. A separate companion bill, Senate Bill 43, was also introduced this legislative session and would do much of the same.

According to Alabama Arise, HB173 would create a significant tax cut for nearly all Alabamians, with low and middle-class residents receiving the largest benefit. However, the bill may raise taxes for the highest earners in the state.

Since both HB173 and SB43 would require a change to the state’s constitution, Alabama voters would have the final say in the change.

Currently, Alabama is one of three states that tax groceries at the full state sales tax rate, Mississippi and South Dakota are the others. According to the Center on Budget and Policy Priorities, a nonpartisan research and policy institute, sales taxes disproportionately affect low and middle-income residents. This is because low-income earners spend a much larger portion of their income on things like groceries compared to higher-income earners, according to the CBPP.