Tax Reform

Taxes are a tool used to promote the common good. They provide the funding for education, child care, Medicaid, mental health care and other public infrastructure that improves everyone’s quality of life. But Alabama’s outdated tax structure fails to raise enough revenue to support these services, which holds our state back from realizing its full potential.

Alabama’s upside-down tax system also taxes many struggling families deeper into poverty. Low-income families pay twice the share of their income in state and local taxes on average that top earners do. Making that problem worse, Alabama is one of only three states with no tax break on groceries.

Arise has been a leading proponent of tax reform in Alabama for decades, and our analysis and advocacy were crucial in the enactment of a state income tax cut for families in poverty in 2006. Our research continues to show the range of benefits that Alabama would reap by untaxing groceries, ending large tax breaks for rich households and big corporations, and taking other steps to rebalance and modernize its tax system.

Featured Resources

Fact Sheet

Explaining Alabama’s state grocery tax reduction: What it covers and what it doesn’t

The sales tax may seem less visible than other taxes because we pay it in small bits, unlike once-a-year property and income tax payments. But in reality, the sales tax is the most regressive of Alabama’s three major state taxes (income, property and sales). It consumes a much greater portion of the household budget for [...]
Issue
Tax Reform
Date
September 20, 2023
Author
Carol Gundlach
Newsletter

June 2023 newsletter

The June 2023 newsletter features a recap of the 2023 Alabama legislative session as well as coverage from our Legislative Day.

Issues
Tax Reform, Voting Rights, Medicaid Expansion, Budgets, Criminal Justice, Health, Housing
Date
June 28, 2023
Author
Matt Okarmus
Fact Sheet

How will the grocery tax reduction law (HB 479) benefit every Alabamian?

HB 479 by Rep. Danny Garrett, R-Trussville, is a grocery tax reduction law that will benefit every Alabamian. Gov. Kay Ivey signed it into law June 15 after it passed the House 103-0 and the Senate 31-0. Below is a look at the principles that make a grocery tax reform bill good, what the new [...]
Issues
Budgets, Tax Reform
Date
May 24, 2023
Author
Alabama Arise
Letters & Testimony

Alabama Arise testimony in support of untaxing groceries

Alabama Arise's Robyn Hyden testified Wednesday before the House Ways and Means Education Committee in support of a bill to reduce the state sales tax on groceries. HB 479, sponsored by Rep. Danny Garrett, R-Trussville, would reduce the state grocery tax from 4% to 2% over time. It also would make this cut contingent on [...]
Issue
Tax Reform
Date
May 24, 2023
Author
Alabama Arise
Fact Sheet

Why Arise supports HB 479 / SB 257, a good plan to untax groceries in Alabama

SB 257 by Sen. Andrew Jones, R-Centre, and HB 479 by Rep. Danny Garrett, R-Trussville, are grocery tax reduction bills that would benefit every Alabamian. Below is a look at the principles that make a grocery tax reform bill good, what the bills do and what Alabamians need next. What makes a grocery tax reform [...]
Issues
Budgets, Tax Reform
Date
May 12, 2023
Author
Alabama Arise
Fact Sheet

What would an ideal plan to untax groceries in Alabama look like?

Several tax bills (including grocery tax cut bills) will be discussed this year in the Alabama Legislature. What makes a tax reform bill good for Alabamians? Here are four important factors to keep in mind: It provides a tax cut for families with low incomes (not just wealthy households). Alabama’s state sales tax on groceries [...]
Issues
Budgets, Safety Net, Tax Reform, Economic Opportunity
Date
April 10, 2023
Author
Alabama Arise
Fact Sheet

The federal income tax deduction is skewed and wrong for Alabama

Wealthy people don’t need a huge, skewed income tax break ‒ but Alabama gives them exactly that. This loophole, called the federal income tax (FIT) deduction, overwhelmingly benefits rich households. It’s an imbalanced tax giveaway that reduces funding for public schools. And it increases the state’s reliance on regressive revenue sources, like the sales tax [...]
Issue
Tax Reform
Date
December 15, 2022
Author
Carol Gundlach
Letters & Testimony

Alabama Arise, 51 partner groups urge U.S. senators to support Child Tax Credit, EITC improvements

The American Rescue Plan Act (ARPA) temporarily expanded the Child Tax Credit (CTC) for hundreds of thousands of Alabama children last year. The law also temporarily increased the maximum Earned Income Tax Credit (EITC) for workers without children and broadened the age range for EITC eligibility. Alabama Arise joined 51 partner organizations Tuesday in a [...]
Issues
Safety Net, Tax Reform, Economic Opportunity
Date
November 15, 2022
Author
Alabama Arise
Fact Sheet

A revenue-neutral plan to untax groceries in Alabama

Alabama Arise supports legislation that would end the state sales tax on groceries and over-the-counter (OTC) drugs and protect school funding. By capping the state income tax deduction for federal income taxes, the plan would bring in $520 million a year, the Legislative Services Agency (LSA) estimates. That would replace the revenue from ending the [...]
Issues
Tax Reform, Budgets
Date
August 18, 2022
Author
Carol Gundlach
Fact Sheet

Eliminating state grocery tax would make life better for Alabama families

Alabama’s sales tax on groceries is a cruel tax on survival, particularly in times of economic insecurity. It increases hunger rates and drives struggling Alabamians deeper into poverty. Two bills in the 2022 regular session – SB 43 by Sen. Andrew Jones, R-Centre, and HB 173 by Rep. Mike Holmes, R-Wetumpka – would end the [...]
Issue
Tax Reform
Date
January 25, 2022
Author
Carol Gundlach
All Issue Resources

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Explaining Alabama’s state grocery tax reduction: What it covers and what it doesn’t
Alabama’s grocery tax reduction now in effect