MONTGOMERY, AL – Alabama Governor Kay Ivey signed House Bill 386 into law on May 9, 2025, reducing the state sales tax on groceries from 3% to 2%. The tax cut will take effect September 1, 2025.
The governor signed the legislation after returning to Montgomery from her Rebuild Alabama Road Tour stop in Limestone County, where she had previewed her intentions during a press conference with reporters on Friday.
“When we can reduce taxes in Alabama and provide some relief to the hardworking people of this state, I am all for it. I was pleased to sign House Bill 386 to take another notch off our state grocery tax,” Governor Ivey said in a statement following the signing.
This marks the second reduction in Alabama’s grocery tax in recent years. In 2023, the state lowered the tax from 4% to 3%. The newly signed legislation continues this incremental approach to reducing the tax burden on essential food items.
HB386 also includes provisions allowing local governments to reduce their own sales and use taxes on groceries, potentially leading to additional tax savings for Alabama residents beyond the state-level reduction.
The new 2% rate will apply to food products that qualify as groceries under the bill’s definition when the law takes effect this fall.
