The base sales tax in Alabama is 4%, and this applies to the whole state. However, the rate you will likely pay or have to collect may be different as there’s a variety of different sales tax rates depending on the county, city, or region your business is or will be located in, or where your customers are having their orders shipped to.
Sales tax in Alabama is slightly different than most other states, the state refers to the taxes that business owners are responsible to collect and convey to the Department of Revenue as “transaction privilege tax” or “state sales tax”; however, it still serves the exact same purpose as “sales and use tax”.
Sales tax in Alabama is calculated on the base rate of 4% throughout the whole state plus the additional percentage rate each county, town, or district imposes, equals the total Alabama sales tax rate you will pay as a consumer or have to collect from your customers and send to the Department of Revenue if you are a business that qualifies for collecting Alabama sales tax. The sales and use tax rate in a specific Alabama location has three parts, the state tax rate (transaction privilege tax), the local tax rate (towns, cities, etc.), and any district tax rate that may be in effect.
Alabama Sales Tax Rate = 4%
Paying Alabama sales tax as a consumer is a seamless process that you do not need to worry too much about when visiting a restaurant or retail store. On the other hand, as a business owner or someone looking to start a business in Alabama, it is a much more complex matter. If you are responsible for collecting sales tax from your customers, you need to know exactly what your responsibilities are, where you need to remit your businesses collected sales tax to, and you need to follow the rules of Alabama sales tax collection.
In some instances, this may apply to online businesses, and if you participate in the Amazon FBA program or have an online business with a lot of your sales taking place in Alabama, you may be subject to sales tax collection depending on where your products are warehoused and the volume of your monthly/annual transactions.
Any retail store, warehouse, inventory of products in the state, or the regular presence of traveling salespeople or agents within Alabama, or if your business has established remote entity nexus, should be paying the prevailing rate of sales tax in Alabama. While paying sales tax in Alabama is applicable to the sale of products, there are some exceptions to this, here are the exemptions from paying sales tax in Alabama:
- Purchases for resale
- Gasoline and Motor Oil
- Medical supplies
- Agricultural supplies (seeds for planting, feed for livestock)
If you are unsure whether your business should collect Alabama sales tax, you may want to visit the Alabama Department of Revenue website. Collecting sales tax or paying sales tax can be confusing at times, this is due to the difference in Alabama sales tax rates, and also knowing and understanding if you are eligible to pay or collect it.
Alabama Sales Tax Rate
The Alabama sales tax is a privilege tax imposed on the retail sale of tangible personal property sold within the state of Alabama by businesses located in Alabama. Once the tax has been collected by the seller from their customers it must be remitted directly to the state. All sales of tangible personal property are retail sales apart from those defined as wholesale sales.
Wholesale sales are the sales of tangible personal property to licensed retail merchants, e-Commerce companies, jobbers, dealers, or other wholesalers for onward resale. This doesn’t include sales to users or consumers that are not for resale, the seller has to maintain the sales tax number or exemption number for these customers. Here are the varying Alabama state sales tax rates:
- 1.5% of the net difference paid for farming machinery, this rate applies to the sales of machines, parts, and attachments for machinery used in manufacturing, processing, compounding, mining, and quarrying tangible personal property.
- 2% of the net difference paid for new and used automotive vehicles, truck trailers, manufactured homes, and semi-trailers.
- 3% of the retail sales price for food sold through coin-operated vending machines.
- 4% of all gross sales tax proceeds of tangible personal property, with the exception of the previous list of sales tax exemptions or that, has been specifically exempted by law and the gross receipts from places of entertainment or amusements.
How and when to file Sales Tax in Alabama
Alabama administers over 200 different city and county sales taxes in addition to the state sales tax rate of 4% – these are called local taxes. It is advisable to contact or research the municipalities in which you do your business in order to figure out if you need to register with them to collect their local taxes. Finding out the county sales tax rates should be straightforward for you as we have included a table for the Alabama county sales tax rates further down this page.
The local taxes your business will have to pay the department of revenue will be a monthly occurrence, with returns and remittances to be filed on or before the 20th day of each month for the previous month’s sales tax collected by your business. However, a taxpayer may decide to file and pay the state-administered local sales tax quarterly only if the total state sales tax for the taxpayer averages less than $200 a month during the 12 month calendar year.
If you are eligible and wish to pay quarterly, it must be made in writing and sent to the Department no later than February 20 of each year. Another sales tax consideration is if a taxpayer’s total state sales tax liability during the calendar year is $10 or less, the taxpayer can file local sales tax on a calendar year basis.
To register with the Alabama Department of Revenue you can visit their website here.
How much is Sales Tax in Alabama
The base Alabama sales tax rate is 4%, but the range of Alabama sales tax, including the county, town, or district sales tax rates is approximately 9-10%. For your convenience, we have included a table (below) that lists the Alabama sales tax rate for each county within the state. There are 67 counties in Alabama. The table combines the base rate of 4% and the local county rate to give you a total tax rate for each county.
Where the sales tax rates get higher than what you see in the table for specific counties is dependent on the type of product/service you are being taxed for.
What you will find in the U.S., which is different from some other countries, is that when you see the price of a product such as a t-shirt in a retail store, or food on a menu in a restaurant, it is usually plus state and county sales tax.
So, when you checkout your items in a store or request the bill at a restaurant, you will likely pay the price you saw on the label or menu + state and county sales tax. This often takes foreigners and those not used to this system by surprise because, in many other countries, the price you see is the price you pay, and it includes any sales tax or value-added tax (VAT).
Example of Alabama Sales Tax in Gadsden
To get a basic understanding of how Alabama imposes a state and county sales and use tax on most products and some services purchased in the state you can make a quick calculation of the amount of Alabama sales tax you will pay based on the product price and sales tax rate charged within the county you are purchasing from.
So, if you are going out for a meal in Etowah County, the sales tax rate is 1%. Usually, you would add this to Alabama’s base sales tax rate of 4%, meaning you would be paying a total of 5%. Since you are also in Gadsden, there is an additional sales tax rate of 5% for the city of Gadsden. So you pay 4% + 1% +5% = 10%. So, when you spend $200 in a Gadsden, AL restaurant, and ask for the check (bill), expect to see an additional 10% added, making your total bill $220 ($20 in Alabama sales tax). Also, bear in mind that if the service is good you should tip your server on top of this!
If you are curious about what the minimum wage is in Alabama and what the minimum wage is for tipped employees, you can head over to our page that has specific details on this.
State of Alabama Sales Tax for Businesses
As a business owner selling taxable goods or services, you act as an agent of the state of Alabama by collecting tax from purchasers and passing it along to the Alabama Department of Revenue. You must be mindful that any sales tax (transaction privilege tax) collected from customers belongs to the Department of Revenue, so, it is entirely your responsibility as a business owner who collects the state of Alabama sales tax to remit the correct amount to the Alabama Department of Revenue to avoid any penalties and accumulative interest.
There is specific terminology surrounding whether, as a business, you need to collect Alabama sales tax. This is called “Sales Tax Nexus.” It basically means, does your business have a “significant presence” in the state. It used to be that sales tax nexus only applied to businesses with a physical presence in the state, such as having employees, an office or warehouse, or retail store, but there can be other circumstances.
Any of the following criteria may be considered by the state of Alabama as qualifying a seller/business to have sales tax nexus:
- An office or place of business such as a retail store
- A warehouse or inventory stored in the state
- The regular presence of traveling salespeople or other agents
- Remote entity nexus
- Economic nexus (i.e. your sales or transactions to customers in the state may mean you are subject to the state’s economic nexus rule)
To learn exactly what the Alabama Department of Revenue determines to be sales tax nexus in Alabama, head over to their website and see what businesses this applies to and what Alabama sales tax you are expected to collect from your customers.
Alabama Sales Tax by County
Alabama, similar to most other states, has adopted a unique way of determining its sales tax (transaction privilege tax) rates within the state. Alabama has a base sales tax rate and each county within the state charges additional sales tax, which added to the base state sales tax rate will equal the rate within that specific area (county or city). However, you must be careful when calculating how much sales tax to charge or pay in certain areas, most cities in Alabama, as mentioned previously will charge additional sales tax to that of the county and state rate combined.
Check out the Avalara website that gives you the specific breakdown of various Alabama sales tax rates, not just for counties, but for cities and towns in Alabama. The rates you see below will often be higher than the flat-rate sales tax charges per county because each city and town charges more which drives up the overall Alabama sales tax based on the zip code you are located in.
The table below lists the 67 Alabama counties that charge sales tax within the state. Alabama’s sales tax is based on the base rate plus the county/district rate, so the rates below are indicative of the total Alabama sales tax you will pay or have to collect from your customers.
|Alabama Sales Tax Rates by County||Total Alabama Sales Tax Rate||Alabama State Sales Tax Rate|
|Autauga County Sales Tax||9.5%||4%|
|Baldwin County Sales Tax||10%||4%|
|Barbour County Sales Tax||9.5%||4%|
|Bibb County Sales Tax||10%||4%|
|Blount County Sales Tax||10%||4%|
|Bullock County Sales Tax||10%||4%|
|Butler County Sales Tax||9.5%||4%|
|Calhoun County Sales Tax||10%||4%|
|Chambers County Sales Tax||10%||4%|
|Cherokee County Sales Tax||7.5%||4%|
|Chilton County Sales Tax||10%||4%|
|Choctaw County Sales Tax||10%||4%|
|Clarke County Sales Tax||10%||4%|
|Clay County Sales Tax||6%||4%|
|Cleburne County Sales Tax||8%||4%|
|Coffee County Sales Tax||9%||4%|
|Colbert County Sales Tax||9%||4%|
|Conecuh County Sales Tax||6%||4%|
|Coosa County Sales Tax||9%||4%|
|Covington County Sales Tax||10%||4%|
|Crenshaw County Sales Tax||10%||4%|
|Cullman County Sales Tax||9%||4%|
|Dale County Sales Tax||9%||4%|
|Dallas County Sales Tax||10%||4%|
|Dekalb County Sales Tax||9%||4%|
|Elmore County Sales Tax||10%||4%|
|Escambia County Sales Tax||10%||4%|
|Etowah County Sales Tax||10%||4%|
|Fayette County Sales Tax||7%||4%|
|Franklin County Sales Tax||9%||4%|
|Geneva County Sales Tax||9.5%||4%|
|Greene County Sales Tax||10%||4%|
|Hale County Sales Tax||7%||4%|
|Henry County Sales Tax||9%||4%|
|Houston County Sales Tax||9%||4%|
|Jackson County Sales Tax||9%||4%|
|Jefferson County Sales Tax||1%||4%|
|Lamar County Sales Tax||6%||4%|
|Lauderdale County Sales Tax||9.5%||4%|
|Lawrence County Sales Tax||7%||4%|
|Lee County Sales Tax||9.75%||4%|
|Limestone County Sales Tax||9%||4%|
|Lowndes County Sales Tax||10.5%||4%|
|Macon County Sales Tax||11.5%||4%|
|Madison County Sales Tax||9%||4%|
|Marengo County Sales Tax||9%||4%|
|Marion County Sales Tax||10%||4%|
|Marshall County Sales Tax||9%||4%|
|Mobile County Sales Tax||10%||4%|
|Monroe County Sales Tax||9%||4%|
|Montgomery County Sales Tax||10%||4%|
|Morgan County Sales Tax||9%||4%|
|Perry County Sales Tax||10%||4%|
|Pickens County Sales Tax||9%||4%|
|Pike County Sales Tax||9.5%||4%|
|Randolph County Sales Tax||6.5%||4%|
|Russell County Sales Tax||9.5%||4%|
|Shelby County Sales Tax||10%||4%|
|St Clair County Sales Tax||10%||4%|
|Sumter County Sales Tax||11%||4%|
|Talladega County Sales Tax||10%||4%|
|Tallapoosa County Sales Tax||10%||4%|
|Tuscaloosa County Sales Tax||10%||4%|
|Walker County Sales Tax||10%||4%|
|Washington County Sales Tax||5%||4%|
|Wilcox County Sales Tax||8.5%||4%|
|Winston County Sales Tax||10%||4%|
Alabama Department of Revenue Contact Details
Most communication with the Alabama Department of Revenue can be conducted through their online services which are available 24/7, or via telephone which is possible between the hours of 8:00 am – 5 pm (Central Daylight Time) Monday through Friday (except US holidays). Here are the main contact methods:
Here is the main address for the Alabama Department of Revenue:
Alabama Department of Revenue
50 North Ripley Street
Montgomery, AL 36104
Phone Number: (334) 242-1490 (if calling from outside the U.S., dial 001-334-242-1490)
If you would like to email the Alabama Department of Revenue, you must specifically find the email address on the website for the department you would like to contact. They can also be contacted on Twitter.