HUNTSVILLE, Ala. (WHNT) — On September 1, 2023, Alabamians received a tax cut on grocery items. Grocery items are now taxed at 3%, rather than the 4%.
However, what qualifies as a “grocery” item has a lot of News 19 viewers confused. We’ve had several viewers reach out to us to ask why certain food items are still being taxed at 4% rather than 3%.
According to HB 479, “food” has the same meaning as defined by the Supplemental Nutrition Assistance Program (SNAP). So items that are eligible under SNAP, are taxed at the 3% Grocery Tax rate.
SNAP covers “staple food products” that fall into four categories.
- Fruits & vegetables
- Meat, poultry, or fish;
- Dairy products; and
- Breads or cereals
Typically if you purchase any “staple food item” in one of those categories it will be taxed at 3%, or the Grocery Tax rate.
Foods that do not fall under the Grocery Tax rate are taxed at the statewide sales tax rate of 4%. This includes “heated foods”, “hot foods”, and “cold prepared foods”.
A rotisserie chicken is an example of a hot food and is taxed at 4%. The “heated foods”, “hot foods”, and “cold prepared foods” exception explains the difference in tax with a rotisserie chicken versus a package of uncooked chicken breast.
A good rule of thumb is if an item comes from the “prepared foods” section of the grocery store, it will likely fall under the regular sales tax rate of 4%, rather than the food rate of 3%.
Alcoholic beverages, tobacco products, vitamins, medicines, and supplements are also not taxed as food items.
Why do I see 8% or 9% tax on my receipt in Madison County?
Other people have reached out to News 19 to ask why if the statewide sales tax rate is 4% and the Grocery Tax rate is 3%, why they are being charged 9% or 8% on food purchases.
The answer to that is simple: in Madison County, there are additional county & city sales taxes.
Why do I see Tax 1 and Tax 2 on my receipt? Am I being double-taxed?
If you see two sections for taxes on your receipt, you are likely NOT being double-taxed. The receipt splits up what items were charged under the Grocery Tax rate (8% in Madison County) and what fell under the regular sales tax rate (9%).
If you believe you were double taxed, contact the customer service department where you bought your goods. Or contact the Alabama Department of Revenue.
How can I tell what items were taxed at what rate?
It isn’t easy to tell at all stores what tax is applied to each item. However, News 19 has noticed that at Walmart, there is an “F” next to food items on your receipt that were taxed under the grocery tax rate.
News 19 has more information on this posted here.
