State guide · AL
Alabama sales tax and property tax
A low state rate that cities and counties build on, a grocery rate cut twice since 2023 and switched off for two months in 2026, and property bills that stay small because homes are taxed on a tenth of their value.
Facts read on official Alabama pages on · Checked by Radif Partners · How we calculate
- State sales tax
- 4%
- Local sales taxes
- Yes, by address
- Groceries
- Reduced state rate, 2%
- Clothing
- Taxed like other goods
- Median property tax
- $890
- Effective property rate
- 0.38% · #50 of 51
Alabama's state sales tax is 4%, but almost nobody pays only that: cities and counties stack their own taxes on top, and many cities also tax sales in their police jurisdiction, the band just outside city limits, usually at half the city rate. Food is the exception at state level. Its state rate dropped to 2% on September 1, 2025, after a step from 4% to 3% in 2023, and Act 2026-604 suspended it entirely from May 1 to June 30, 2026; local taxes on food never stopped. Cars pay a reduced 2% state rate, prescription drugs are exempt, and clothing is taxed outside the July back-to-school weekend. Property tax runs the other way. Homes are assessed at 10% of appraised value, so the median owner paid only $890 in 2024 on a $233,300 home (Census ACS), an effective rate of 0.38%, ranked 50 of 51.
Total to pay
$104.00
Sales tax $4.00 · 4% of the price
| Price before tax | $100.00 |
| State tax · 4% | $4.00 |
| Local tax · 0% | $0.00 |
| Total | $104.00 |
Rule applied: general state rate. Exact local rate for an address: Alabama rate lookup. How this is calculated.
Sales tax in Alabama
The 4% figure is the smallest piece of an Alabama receipt. The Department of Revenue (ALDOR) administers more than 200 city and county sales taxes, yet some localities collect their own tax directly and publish their own rules, so a retailer may file with the state and with the city separately. Cities can also reach past their borders: in the police jurisdiction around a city, sales usually carry half the city's rate. Two stores a mile apart, one inside the limits and one in the PJ, can therefore print different totals for the same item. ALDOR's rate lookup takes a street address and returns every layer; type the combined local figure into the calculator above.
Groceries show how the state part and the local part can drift apart. A $180 grocery run now carries $3.60 of state tax at the 2% food rate, against $7.20 at the general rate, but the city and county food taxes still apply in full. During the May and June 2026 suspension, those local taxes were the only ones on the receipt.
Several reduced state rates matter for bigger purchases. A $32,000 pickup pays $640 of state tax at the automotive rate of 2%, against $1,280 at the general rate. Online sellers enrolled in the Simplified Sellers Use Tax program charge a flat 8% instead of the address-based rate, so a $250 order costs $20 of tax whether it ships to a city or to a rural county. Two holidays suspend the state tax: severe weather supplies on the last full weekend of February (February 20 to February 22, 2026), and back-to-school items in July (July 17 to July 19, 2026), when clothing at $156 or less per article goes untaxed by the state. Local taxes follow only where the city or county opted in, and Act 2025-309 now requires that choice at least 90 days ahead.
What the state charges, item by item
| Item | State rate | Local tax | Rule |
|---|---|---|---|
| Most goods | 4% | yes | General state sales and use tax rate. Reduced state rates apply to food/groceries (2%), automotive sales (2%), manufacturing and farm machinery (1.5%). Cities and counties add their own sales taxes. |
| Groceries (food for home) | 2% | yes | State rate on food/groceries is 2% since September 1, 2025 (3% from Sept. 1, 2023 to Aug. 31, 2025). City and county taxes still apply to food. Under Act 2026-604 the state portion on food was suspended from May 1 to June 30, 2026. |
| Clothing | 4% | yes | Clothing is taxable at the general rate except during the July back-to-school holiday (items of $156 or less in 2026). |
| Prescription drugs | 0% | no | |
| Automotive (motor vehicles) | 2% | State sales and use tax rate on automotive sales. | |
| Manufacturing machinery and farm machinery | 1.5% | Reduced state rate. | |
| Simplified Sellers Use Tax (remote sellers) | 8% | Flat rate collected by eligible remote sellers in place of state and local use tax (§40-23-193(a)). | |
| Lodgings | 4% | State lodgings tax; 5% in the 16 Alabama Mountain Lakes Area counties. |
Local sales taxes
Levied by city and county sales, use, rental and lodgings taxes; ALDOR administers over 200 local sales taxes, others are self-administered by the locality; cities may also levy a police-jurisdiction (PJ) rate, typically half the corporate-limits rate. Find the exact combined rate for an address with the official Alabama lookup, then type the local part into the calculator above.
Sales tax holidays in 2026
| Holiday | Dates | What qualifies |
|---|---|---|
| Severe Weather Preparedness Sales Tax Holiday | February 20, 2026 to February 22, 2026 | Held by statute on the last full weekend of February (Friday 12:01 a.m. to Sunday midnight): batteries, weather radios, flashlights, tarps, first aid kits and similar items (per-item cap adjusted for inflation since Act 2025-309; $94 per item and $1,564 for portable generators in the 2027 edition). Local participation varies. |
| Back-to-School Sales Tax Holiday | July 17, 2026 to July 19, 2026 | Clothing $156 or less per article; computers, software and school computer supplies, single purchase of $1,173 or less; school supplies, art supplies and instructional material $78 or less per item; books $47 or less. State tax only; local tax applies unless the locality opted in. |
Act 2025-309 indexes the holiday price caps to the Consumer Price Index and requires localities to adopt the exemption at least 90 days before the holiday weekend.
Worth knowing about Alabama sales tax
- The state food rate fell to 2% on September 1, 2025, after a cut from 4% to 3% on September 1, 2023. source
- Act 2026-604 suspended the state sales tax on food from May 1 through June 30, 2026; city and county food taxes were not affected. source
- Remote sellers in the Simplified Sellers Use Tax program collect a flat 8% instead of the combined state and local rate. source
- ALDOR administers over 200 city and county sales taxes, but not all; some localities collect their own tax directly. source
- Many cities also tax sales in their police jurisdiction outside city limits, usually at half the city rate. source
- Sales tax returns are due on the 20th of the month following the sales. source
Property tax in Alabama
Alabama sorts property into four classes and taxes each on a different slice of its appraised value. Owner-occupied homes, farms and timberland sit in Class III at 10%; commercial and other property in Class II at 20%; utilities at 30%; private cars and pickups at 15% in Class IV. Mills are then applied to that assessed value. ALDOR's own illustration takes a $100,000 house to $10,000 of assessed value and, at 32.5 mills, a bill of $325 before exemptions. The state, counties, cities and school districts all levy, and county commissions and other taxing bodies set the rates.
At the Census median value of $233,300, the assessed value is $23,330. The basic homestead exemption, H-1, removes $4,000 of assessed value from the state levy and $2,000 from the county levy, and counties and cities can raise their part to $4,000. Owners aged 65 or older and disabled owners move to the H-2, H-3 or H-4 exemptions, which wipe out the state tax and, for H-3, the whole bill. Each one is claimed at the county office, and the owner must be living in the home on October 1, the first day of the tax year.
A newer limit changes what buyers should expect. Under Act 2024-344, the taxable assessed value of homes and commercial real estate can climb by no more than 7% a year, starting with taxes collected from October 1, 2025, and the cap runs through the fiscal year beginning October 1, 2027. It resets on a sale or a new improvement, so a seller's bill says little about the buyer's. At the Census ratio of 0.38%, a $300,000 house pays about $1,143 a year. Bills fall due October 1 and turn delinquent after December 31.
Property tax on a home in Alabama
Typical bill per year
$889
| Per month | $74 |
| Median effective rate in Alabama | 0.38% |
| Median bill paid | $890 |
Census median ratio; your county, city and school district set the real levy.
| Census figure | Alabama |
|---|---|
| Median home value (owner-occupied) | $233,300 |
| Median real estate taxes paid | $890 |
| with a mortgage | $1,064 |
| without a mortgage | $679 |
| Effective rate (tax ÷ value) | 0.38% |
| Rank by effective rate (1 = highest) | 50 of 51 |
| Rank by median bill | 50 of 51 |
How the taxable value is set
Assessed value = appraised value x class ratio: Class I utilities 30%, Class II other property 20%, Class III owner-occupied residential, agricultural and forest 10%, Class IV private cars and pickups 15%. Since tax year 2025 (Act 2024-344), the taxable assessed value of Class II and III real property may rise by at most 7% a year; the cap resets on a sale or new improvement and runs through the fiscal year beginning October 1, 2027. Who levies the tax: Ad valorem tax levied on assessed value by the state, counties, municipalities and school districts; millage rates are set by county commissions and other taxing agencies.
Payment calendar: Property taxes become due on October 1 and are delinquent if paid after December 31.
Other property tax relief
- H-2 (65+ with AGI under $12,000, or retired disabled). Exempt from all state property tax and $5,000 of assessed value of county tax, including school taxes. source
- H-3 (65+ with taxable income of $12,000 or less, or permanently disabled). Exempt from all ad valorem taxes on the homestead. source
- H-4 (65+ with income over $12,000). Exempt from all state property tax and $2,000 of assessed value on county taxes. source
- Current use valuation. Agricultural and timber land in Class III can be appraised on current use rather than market value on application. source
Worth knowing about Alabama property tax
- ALDOR's worked example: a $100,000 home x 10% = $10,000 assessed value; at 32.5 mills the tax is $325 before exemptions. source
- Owner-occupied homes are assessed at 10% of value, half the 20% ratio of commercial property. source
- Under Act 2024-344, taxable assessed value of homes and commercial real estate can rise at most 7% per year, starting with taxes collected from October 1, 2025. source
- A buyer's taxable value resets to full value after a sale, so the seller's tax bill is not a guide to future taxes. source
- Private passenger cars and pickups are taxed as property in Class IV at 15% of value. source