Ending the state grocery tax and protecting schools

Alabama’s tax system is upside down, and the state sales tax on groceries is one reason why. Alabama remains one of only two states — the other is Mississippi — with no tax break on groceries. Food costs consume a larger portion of the household budget for low-income families than for those who are better off, so the grocery tax hits low-income people especially hard. The grocery tax is part of why Alabama’s overall tax system requires low- and middle-income people to pay twice as big a share of their incomes in state and local taxes as the riches households pay.

A tax on survival: Grocery tax policies in America

Food takes a much bigger bite out of the household budget for low-income families than for richer ones, and sales taxes on groceries thus hit harder at lower incomes. In recognition of this fact, most states either have exempted groceries from state sales taxes entirely or have devised ways to help offset grocery taxes for low-income people. Alabama and Mississippi stand alone in offering no tax break break on groceries.

This fact sheet considers the effects of grocery taxes on low-income households and examines the ways that Alabama could reduce or eliminate its sales tax on groceries.

Teamwork for the common good

If you talk to a low-income Alabamian about the state’s tax system, you’re liable to hear two things. One is a boast that the state has some of the nation’s lowest taxes. The other is a complaint that, nevertheless, the person pays too much in taxes. The statements may sound contradictory, but both are grounded in reality.

This fact sheet examines an Alabama tax paradox: that low-income residents pay so much in taxes even as their state collects comparatively little money for the public services that can help make their lives better.

A sense of scale: Small businesses in Alabama

Lawmakers often debate how a bill would affect small businesses, but no single official definition of “small business” exists. What are small businesses, anyway? How are they taxed in Alabama? And do small businesses survive or fail because of taxes, or do other factors play larger roles?

This fact sheet answers these questions and more.

Big piece of a small pie: Alabama’s tax paradox

If you talk to a low-income Alabamian about the state’s tax system, you’re liable to hear two things. One is a boast that the state has some of the nation’s lowest taxes. The other is a complaint that, nevertheless, the person pays too much in taxes. The statements may sound contradictory, but both are grounded in reality.

This fact sheet examines an Alabama tax paradox: that low-income residents pay so much in taxes even as their state collects comparatively little money for the public services that can help make their lives better.