MONTGOMERY, Ala. (WHNT) — A trip to the supermarket could be getting cheaper soon. Some state leaders said now is the time to eliminate Alabama’s grocery tax.
Depending on where you live in the state, you could be paying up to 11% in taxes on groceries. Alabama is one of three states in the country that fully taxes food.
But with about $3 billion in state budget surpluses and inflation hitting households, Lt. Gov. Will Ainsworth said the 4% state food tax must end.
“The time is now to act because our state’s doing well, and people in Alabama need a tax break,” Ainsworth said.
Ainsworth said he’s met with the Alabama Grocers Assocation and other legislative leaders about different ways to end the tax. Whether through a total repeal or a phase-out over time, he thinks a bill could pass this session.
“We’ve got some we’re working on that we’re going to try to find a sponsor of, and then make sure we get something passed,” Ainsworth said.
The question lawmakers have always grappled with is how to replace lost revenue. The tax brings in about $500 million to the education budget annually.
Ainsworth said budget surpluses and economic growth in the state make replacement revenue measures unnecessary.
“When the economy grows, it’s time to give money back to people,” Ainsworth said.
Those with the nonprofit Alabama Arise are encouraged by the talk among top state leaders.
“All of the discussion from state leadership is really positive,” Alabama Arise Executive Director Robyn Hyden said.
Alabama Arise has been advocating for years to untax groceries in the state. Hyden said its proposal would replace revenue by capping the federal income tax deduction that can be used to reduce state income taxes.
“We’re one of only two states that actually provides this deduction,” Hyden said. “It costs our state education trust fund over $900 million a year, so we’re spending a lot to give this tax break. We think we could simply redirect some of that money.”
Removing the grocery tax has received bipartisan support. The Alabama GOP released a statement Thursday favoring the tax cut, and Democratic lawmakers have said this is a top legislative priority.
Eliminating the state grocery tax would not get rid of food taxes entirely, as cities and counties have their own taxes.