Tax reform law benefiting Alabama small businesses goes into effect Sunday

MONTGOMERY, Ala. (WSFA) - Starting Oct. 1, more than 3,000 Alabama small businesses will no longer be required to pay monthly estimated sales taxes to the state Department of Revenue.

The new law, which Gov. Kay Ivey signed in June, removes the monthly estimated sales tax requirement for businesses with less than $20,000 in average monthly sales tax liability.

“I am pleased to report that this small business tax reform law, which will take effect October 1, is expected to positively affect over 3,000 Alabama small businesses,” said Ivey. “By freeing small businesses with less than $500,000 in monthly sales from having to pay estimated monthly sales taxes and allowing them to pay the taxes after the point of sale, they will experience greater cash flow and accordingly more flexibility to operate.”

Affected small businesses will be required to pay sales taxes based on the previous month’s sales tax receipts, payable in monthly installments on or before the 20th of the month.

According to the Alabama Department of Revenue, businesses’ monthly sales tax returns for the calendar year 2022 will be reviewed to identify those that are affected by the new law.

Those who are affected by the change in threshold will be notified by letter.

Businesses may contact the Alabama Department of Revenue’s Sales Tax Administration Section for more information.

Not reading this story on the WSFA News App? Get news alerts FASTER and FREE in the Apple App Store and the Google Play Store!

Copyright 2023 WSFA. All rights reserved.