This State Just Lowered Grocery Sales Tax — Is Yours Next?
Written by
Adam Palasciano
Edited by
Rebekah Evans
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
If you’re feeling the financial squeeze at the supermarket register, you’re probably not alone. Groceries have gotten quite expensive over the past several years.
In fact, according to the USDA, the all-food Consumer Price Index (CPI) rose 23.6% from 2020 to 2024. This incredible price increase was due largely to supply chain issues and a shift in consumer consumption as a result of the pandemic. Now, grocery prices remain higher and it’s become much more costly to put food on the table.
Luckily, there’s one state that just lowered its grocery sales tax to offer some financial relief to its residents, but it might not be the state you’re thinking of — read on to find out.
Alabama Is Reducing Sales Tax on Groceries
The Alabama Reflector reported that the Alabama Senate recently passed a new bill to cut the state sales tax on groceries from 3% to 2%.
Bill HB 386 creates a new tax deduction on groceries by taking one additional percentage point off the state’s existing grocery sales tax.
So, for example, an Alabama family will now pay $6 in taxes on $300 worth of groceries versus $9 before HB 386 was passed. However, some residents may still pay additional local grocery sales taxes depending on which part of the state they reside in.
Only One-Fifth of U.S. States Tax Groceries
As per Kiplinger, nine other U.S. states still tax grocery purchases in addition to Alabama. They include:
- Alabama
- Arkansas
- Hawaii
- Idaho
- Illinois
- Mississippi
- Missouri
- South Dakota
- Tennessee
- Utah
Meanwhile, two other U.S. states, Kansas and Oklahoma, recently eliminated their state grocery taxes as well. If you live in a U.S. state that still taxes groceries, consider the possibility of moving to one of the other 40 U.S. states without a grocery tax. This may help put money back in your pocket, especially if it’s unclear when or if your state may drop its grocery tax.
More From GOBankingRates
Sources
- USDA, “Food Prices and Spending.”
