HB 531 would exempt contractors working on public highway, road, or bridge construction projects from paying state taxes on natural gas and liquefied petroleum gas (LPG) used during construction. Specifically, it removes utility gross receipts tax, utility service use tax, and state sales and use tax on these fuels for licensed contractors or subcontractors under government contracts. Counties and municipalities may also adopt similar local tax exemptions for the same purpose. The bill, set to take effect on September 1, 2026, applies only to projects funded by governmental entities as defined in Alabama law.
HB 388 exempts 10 specific community foundations in Alabama from state sales and use taxes, including the Black Belt Community Foundation, Central Alabama Community Foundation, and others listed in the bill. It extends this state tax exemption through August 31, 2031, and allows local municipalities and counties to also exempt these foundations from local sales taxes starting September 1, 2026. The bill repeals the previous tax exemption law (Section 40-9-39.4) and requires these foundations to submit annual reports to the Department of Revenue. This policy change directly affects the 10 named community foundations by removing their sales tax obligations at both state and local levels for the specified period.
HB 480 changes how Alabama counties and municipalities distribute sales tax revenue from the simplified sellers use tax (SSUT). It requires each county and municipality to allocate a minimum of 40% of their SSUT proceeds to local school boards serving their area, instead of keeping the funds for general use. This applies to all counties and municipalities that haven't already adopted such a policy by October 1, 2027. The bill takes effect January 1, 2028, redirecting existing sales tax revenue directly to public schools. It repeals the current monthly distribution requirement for these funds.
HB 399 modifies tax incentives for large data processing centers in Alabama. It limits the maximum tax exemption period to 20 years starting January 1, 2027, and requires these centers to pay state noneducational ad valorem taxes and sales taxes on building materials, power infrastructure, and other specific purchases beginning in 2027. The bill extends the sunset date for existing tax abatements related to data centers and updates code language for clarity. This directly affects new or expanded data centers meeting job and wage thresholds (20+ jobs averaging $40,000+ annual compensation). The changes aim to balance economic development incentives with increased tax revenue collection for infrastructure investments.
HB 434 changes how Alabama's simplified sellers use tax (SSUT) revenue is distributed. It reduces the portion going to the Education Trust Fund and redirects those funds directly to local school boards based on student enrollment. Specifically, it reallocates funds previously sent to the Education Trust Fund (25% under current law) to local boards of education, while keeping the same total allocation percentages for counties and municipalities. This bill directly affects local school districts by increasing their funding from SSUT proceeds, and the Education Trust Fund by reducing its share. The change would take effect on October 1, 2026.
SB 310 would authorize Montgomery's city council to impose a tax on individuals working in the city, directly affecting residents and workers who engage in trades, occupations, or professions within Montgomery. The bill allows the city to levy this tax through ordinance to fund healthcare stabilization, transportation infrastructure, and public safety initiatives. If enacted, the tax would become effective on June 1, 2026, though the bill is currently pending in committee. The measure does not specify tax rates or exemptions, focusing solely on granting the city council authority to implement such a tax.
HB 123 exempts the Cook Museum of Natural Science and the McWane Science Center from paying state sales and use taxes. Local counties or municipalities may also choose to exempt these institutions from local sales and use taxes, following existing tax exemption procedures. The bill takes effect on September 1, 2026, providing tax relief for these specific educational institutions. This policy change directly affects the two museums' operational costs by removing a financial burden related to sales and use taxes.
HB 360 creates an annual sales tax holiday for firearms, ammunition, and specific hunting gear (like archery equipment, holsters, and suppressors) during the last weekend of August each year. This exempts the state sales tax on these purchases, directly affecting consumers buying these items during that period. Counties and municipalities may also choose to exempt local sales taxes on the same items during the holiday. The holiday runs from 12:01 a.m. on the last Friday in August until 12:00 a.m. on the following Sunday. Local governments must adopt opt-in resolutions by June 1 each year to participate.
HB 204 allows Henry County to impose a tax of up to 4% on short-term lodging rentals (such as hotels, motels, and vacation rentals) for transient guests staying less than 30 days. It exempts long-term rentals (30+ days), permanent housing, and items already subject to state sales tax. Businesses must report monthly tax collections to Alabama’s Department of Revenue, with proceeds deposited into the county’s General Fund for economic development and tourism promotion. The tax applies only to temporary stays, not permanent residences or sales tax-covered services.
SB 36 requires Alabama municipalities to refund sales and use taxes paid by Alabama residents when purchasing goods from another Alabama city or town. It directly affects Alabama residents who buy goods outside their home municipality (e.g., a Montgomery resident buying in Birmingham) and pay local taxes there. To get a refund, residents must submit proof of payment and residency once yearly, and municipalities must pay interest starting 90 days after a valid refund request is received. The law takes effect October 1, 2026, and applies only to taxes collected on tangible personal property.
