Alabama's Grocery Tax Cut Takes Effect: Relief at the Register Begins September 1

September 1, 2025 - MOODY, AL. - Starting September 1, Alabama shoppers will see immediate savings at the checkout line as the state's grocery tax drops from 3% to 2%, marking a major milestone in a long-running effort to ease the financial burden on families across the state.

The change, enacted under Act 2025-305, applies to all SNAP-eligible food items, which include most groceries intended for home consumption. While local city and county taxes remain unchanged for now, the state's move signals a broader shift toward tax relief for everyday essentials.

💬 Speaker Ledbetter: "Another $135 Million in Tax Cuts Are Now in Effect"

House Speaker Nathaniel Ledbetter praised the tax cut as part of a broader fiscal strategy:

"Another $135 million in tax cuts are now in effect. Our fiscally conservative approach to government has led to over $1.5 billion in tax cuts and Alabama being consistently recognized as one of the lowest taxed states in America."

This latest reduction follows a series of tax reforms passed in recent years, including cuts to overtime income taxes and exemptions for baby and maternity products. The cumulative effect is expected to provide meaningful relief to working families, especially amid rising food costs.

What It Means for Families

According to the Alabama Grocers Association, a family of four could save roughly $125 per year under the new rate. For households spending $600 a month on groceries, the state portion of their tax drops from $18 to $12 monthly-an annual savings of $72.

Advocates like Alabama Arise have long pushed for the change, citing the regressive nature of grocery taxes that disproportionately impact low-income residents. The new law also prevents local governments from increasing their grocery tax rates, though they may choose to reduce them.

Fiscal Impact and Future Outlook

While the tax cut is expected to reduce revenue to the Education Trust Fund by approximately $121 million, lawmakers say the state's strong fiscal position makes the move sustainable. The long-term goal, according to several legislators, is to fully eliminate the state grocery tax, though that will require careful budgeting and continued economic growth.