AL HB386

Reduces Alabama's state sales and use tax rate on food from 3 percent to 2 percent effective September 1, 2025, without requiring a growth threshold.

Removes the 3.5% growth requirement that previously limited the rate reduction and eliminates the 25 percent cap on rate cuts for county and municipal food taxes.

Allows county and municipal governing bodies to reduce their local sales and use tax rates on food by any amount, not just 25 percent, without growth requirements.

Amends Sections 40-23-2, 40-23-40, 40-23-61, and 40-23-62 of the Code of Alabama 1975 to implement these changes.

Act becomes effective June 1, 2025.