The sales tax rate on groceries drops from 4% to 3%, something the Alabama lawmakers approved this year in Montgomery.
The old saying goes ‘there is no such thing as a free lunch’ and the coming drop in the grocery sales tax is no exception. Still, Dr. Ben Meadows, an Associate Professor of Economics at UAB says this has the chance to help families.
Another way to view it; what’s good for the family is good for the state in terms of joining a number of other states that don’t charge a sales tax on groceries. It’s a matter of context, according to Dr. Meadows. But, there is no getting around the fact Alabama stands to lose hundreds of millions of dollars per year in state revenues.
The tax will drop another 1% in September of 2024 but ONLY if the state’s education trust fund has grown enough over the previous fiscal year, according to state records.
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