al-sales-tax

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# AL Sales Tax

## Section 1 -- Quick reference

**Quick reference table**

| Field | Value |
| --- | --- |
| Jurisdiction | Alabama, United States |
| Jurisdiction code | US-AL |
| Tax type | Sales and Use Tax (state + local) |
| State rate | 4.00% |
| Local rate range | 0% -- 7% (county + city + special district) |
| Maximum combined rate | ~11.00% |
| Sourcing | Destination-based |
| Economic nexus | $250,000 in sales (revenue only) |
| Primary legislation | Code of Alabama §40-23 (Sales Tax); §40-23-60 (Use Tax) |
| Tax authority | Alabama Department of Revenue (ADOR) |
| Filing portal | https://myalabamataxes.alabama.gov |
| SST member | No |
| Self-administered cities | ~200+ cities administer their own local sales tax separately |
| Grocery food | FULLY TAXABLE at state level (reduced to 2% effective Sep 2023) |
| Federal framework skill | us-sales-tax |
| Skill version | 2.0 |

**CRITICAL: Alabama has ~200+ self-administered cities. Sellers must register SEPARATELY with each self-administered city where they have nexus.**

### Required inputs

**Required inputs table**

| # | Question | Why it matters |
| --- | --- | --- |
| 1 | Alabama sales tax registration / tax ID? | Required for state filing |
| 2 | Filing frequency? | Monthly, quarterly, annual |
| 3 | Nexus type? | $250K threshold |
| 4 | Marketplace seller? | Facilitators collect on facilitated sales |
| 5 | Products/services sold? | Taxability classification |
| 6 | Sell to exempt entities? | Exemption certificates required |
| 7 | Locations/employees/inventory in AL? | Physical nexus |
| 8 | Sell into multiple local jurisdictions? | Self-administered city complexity |

### Refusal catalogue

- **R-AL-1** — Self-administered city detailed compliance. Each city has separate registration, returns, and rates. Specific city compliance requires individual research.

### 3.1 Tangible personal property

**Tangible personal property table**  _(Code of Ala. §40-23-2)_

| Pattern | Taxable? | Notes |
| --- | --- | --- |
| General TPP | TAXABLE | Code of Ala. §40-23-2 |
| Clothing and footwear | TAXABLE | No general exemption; holiday exemption only |

### 3.2 Food and beverages

**Food and beverages table**

| Pattern | Taxable? | Notes |
| --- | --- | --- |
| Grocery food (unprepared) | TAXABLE at reduced state rate 2% | State rate reduced from 4% to 2% (effective Sep 2023); local rates still apply at full rate |
| Prepared food | TAXABLE at full 4% |  |
| Candy, soft drinks | TAXABLE |  |

### 3.3 SaaS and digital goods

**SaaS and digital goods table**

| Pattern | Taxable? | Notes |
| --- | --- | --- |
| Canned software (physical) | TAXABLE | TPP |
| Canned software (download) | TAXABLE |  |
| Custom software | Varies | Escalate to reviewer |
| SaaS (cloud-hosted) | TAXABLE | Alabama taxes SaaS |
| Digital goods (downloads) | TAXABLE |  |

### 3.4 Services

**Services table**

| Pattern | Taxable? | Notes |
| --- | --- | --- |
| Most services | NOT TAXABLE | Alabama taxes only enumerated services |
| Rental of TPP | TAXABLE |  |
| Amusement/recreation | TAXABLE |  |
| Professional services | NOT TAXABLE |  |

### 3.5 Exemptions

**Exemptions table**

| Pattern | Status | Notes |
| --- | --- | --- |
| Prescription drugs | EXEMPT |  |
| Manufacturing machinery (directly in manufacturing) | REDUCED RATE | State rate 1.5%; local applies |
| Farm equipment | EXEMPT |  |
| Resale | EXEMPT | Valid certificate required |
| Interstate commerce | EXEMPT | Shipped out of state |
| Government purchases | EXEMPT |  |

## Section 4 -- Rate lookup

**Rate lookup table**

| Jurisdiction | Approximate combined rate |
| --- | --- |
| Birmingham | ~10% |
| Montgomery | ~10% |
| Huntsville | ~9% |
| Mobile | ~10% |
| Tuscaloosa | ~9% |

**Use ADOR rate lookup for exact rate by address.**

### 5.1 Self-administered cities

- **Self-administered cities rule** — ~200+ Alabama cities self-administer their local sales tax. Sellers must register separately with each. Birmingham, Montgomery, Huntsville, Mobile, Tuscaloosa are all self-administered.

From openaccountants/openaccountants, AGPL-3.0.

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