AL HB427

Eliminates the state sales and use tax on food effective September 1, 2025, making food purchases exempt from taxation.

Reduces food tax rate from 3 percent to 2 percent on September 1, 2025, contingent on Education Trust Fund revenue growth of at least 3.5 percent over the previous fiscal year.

If the growth requirement is not met by fiscal year ending September 30, 2025, the rate reduction to 2 percent is delayed until a subsequent fiscal year when the growth threshold is satisfied.

Amends Sections 40-23-2 and 40-23-61 of the Alabama Code to implement the changes to both sales tax and use tax rates on food.

Becomes effective June 1, 2025.