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 But Alabama’s outdated tax structure fails to raise enough revenue to support these services, which holds our state back from realizing its full potential.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

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
Letters & Testimony

To strengthen the common good: Six principles for allocating Alabama’s ARPA funding

Introduction Dear Governor Ivey, One of the darkest years in recent memory has put Alabama’s families, communities, health system, businesses – and our leaders at all levels – to the test. Thank you for all your efforts to keep Alabamians safe and secure during this unprecedented emergency. Now that a post-COVID world is dawning, the [...]
Issues
Budgets, Criminal Justice, Health, Housing, Public Transportation, Safety Net, Tax Reform, Economic Opportunity, Coronavirus, Medicaid Expansion
Date
July 7, 2021
Author
Alabama Arise
Fact Sheet

Progressive tax changes would allow Alabama’s budgets to endure and rebuild after COVID-19

Alabamians are living through hard times right now. Thousands of people are sick. Many more are scared or out of work. Uncertainty is everywhere amid a pandemic with no clear timetable or end game. As more businesses close or cut back, as more people lose income, and as fewer of us go to the stores [...]
Issues
Budgets, Tax Reform, Coronavirus
Date
April 30, 2020
Author
Carol Gundlach
Fact Sheet

Unemployment insurance improvements, recovery rebates will help Alabamians hurt by COVID-19 pandemic

The coronavirus pandemic has caused an unprecedented increase in unemployment insurance claims nationally. And the story is the same in Alabama, where 74,056 UI claims were filed in the week ending Saturday, March 28. That’s easily a record high since 1987, the earliest year for which weekly data is available for Alabama. The number of [...]
Issues
Tax Reform, Economic Opportunity, Coronavirus, Safety Net
Date
April 1, 2020
Author
Dev Wakeley
Fact Sheet

Untax groceries and protect funding for Alabama’s public schools

The sales tax on groceries is a cruel tax on survival. It drives struggling people deeper into poverty. Here’s why Alabama should end this tax – and how to do it: Alabama is one of only three states with no tax break on groceries. The state grocery tax is 4%, equal to two weeks’ worth [...]
Issue
Tax Reform
Date
February 25, 2020
Author
Alabama Arise
Fact Sheet

Removing the FIT deduction would allow Alabama to untax groceries, expand Medicaid

Alabama's federal income tax (FIT) deduction provides a huge tax break for high-income individuals – but at what cost? $719 million to be exact. The FIT deduction is one big reason Alabama's tax system is upside down. For those who earn $30,000 a year, the deduction saves them about $27 on average. But for the [...]
Issues
Health, Tax Reform, Medicaid Expansion, Budgets
Date
April 15, 2019
Author
Alabama Arise
Fact Sheet

How the state grocery tax hurts struggling Alabamians

No matter how much or how little money we have, we all have to eat to live. But the share of earnings that people must devote to securing basic survival is not the same for everyone. Food takes a much bigger bite out of the household budget for low-income families than for richer ones. And [...]
Issue
Tax Reform
Date
February 22, 2019
Author
Carol Gundlach
Fact Sheet

4 reasons why a new state tax break for private school tuition would hurt public education in Alabama

Update: Arise members stopped this plan in its tracks! After lawmakers received hundreds of emails and phone calls from our supporters opposing this bill, the Senate amended HB 251 on March 14 to remove the language that would have created a tax break for private school tuition. The House agreed to the change on March [...]
Issue
Tax Reform
Date
March 22, 2018
Author
Kimble Forrister
Fact Sheet

Cigarette tax for Medicaid: A win-win to improve health and fill Alabama’s revenue gap

The future of Alabama Medicaid is on the line as lawmakers consider a threadbare 2017 General Fund budget. Without significant new revenue, Medicaid would not only lose the promising regional care organizations (RCOs) set to launch in October but also would cut vital services and doctor payments. Those cuts could place the Medicaid program itself [...]
Issue
Tax Reform
Date
March 7, 2016
Author
Alabama Arise
Fact Sheet

6 things to know about the FICA deduction

The Alabama Legislature may consider removing the state FICA income tax deduction during 2015’s second special session. Without significant new General Fund revenue, the state may make enormous cuts to Medicaid, child care, public safety and other vital services. As lawmakers decide how to address the General Fund shortfall, here are six things to know about [...]
Issue
Tax Reform
Date
September 9, 2015
Author
Carol Gundlach
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