Alabama state seal

AlabamaSales Tax

A Complete Guide For Businesses

Automate My AlabamaSales Tax Filings

State Rate
4%

Local Tax
yes

State Portal
Department of Revenue

Phone
(334) 242-1490

General requirements

Alabama is a destination-based state (sales are taxed where the buyer is located).

  • Sales tax is charged on the retail sale of tangible personal property (TPP) sold in the state by businesses located in the state
  • For distributors, items purchased for resale aren’t taxed

File your Alabama sales tax return online at My Alabama Taxes.

Rates

The state sales and use tax rate for Alabama is 4%. In addition to the state sales tax, local sales taxes are also due, and these rates vary. Search local rates by city or county.

For a fast and accurate sales tax rate lookup by zip code, use our up-to-date calculator below.

Look up your Alabama sales tax rate:

How food is taxed

Food items, food ingredients, and prepared foods are all taxed at the general state and local rates. Food sold in vending machines is taxed at a reduced rate of 3%.

Nexus in Alabama

Business activities that establish a minimum tax connection to the state include:

  • Maintaining a physical place of business in the state such as a warehouse or store
  • Maintaining the regular presence of a salesperson or agent
  • Storing inventory
  • Maintaining a relationship, such as an affiliate relationship, with an in-state business

Economic nexus in Alabama:

Want more? Check out this FAQ and questionnaire.

Filing schedule

Returns are due on or before the 20th day of the month for the previous month’s sales. If your total tax liability is less than $200 per month during the preceding calendar year, you can elect to file and pay quarterly by appealing in writing to the Department no later than February 20th of each year.

When you file and pay on time, you’ll receive a discount of 5% on the first $100 of tax due, and 2% of all tax due over $100. This discount cannot exceed $400 per month.

Registering to collect sales tax in Alabama

Businesses may obtain a new tax account number online at My Alabama Taxes.

You should receive your account number within two to three days by email. A license will be mailed to you later.

Penalties

Penalties are charged as follows:

  • Failure to file: 10% of the tax required to be paid or $50.00, whichever is greater
  • Failure to pay: 10% of the tax required to be paid

Interest is charged at the current rate.

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