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Alabama sales tax ratve lookup & tool & calculator

Alabama Sales Tax Calculator & Rate Lookup Tool 2024

Updated on 3/16/2024

If you are an online business owner who sells products or services to customers in Alabama, you may have to deal with sales tax. A sales tax is a tax that is added to the price of taxable goods or services at the point of sale. The sales tax collected by the seller is then remitted to the state and local governments.

Sales tax laws can be complex and confusing, especially for online businesses that sell across state lines. In this blog post, we will explain how sales tax works in Alabama, who needs to collect it, how to register for it, how to collect it, and how to file and remit it.

We will also cover some of the recent changes in sales tax laws that affect online businesses, such as the Supreme Court’s Wayfair decision and the Alabama Simplified Sellers Use Tax Program (SSUT).

What is alabama sales tax by address, zip code, & county and how does it work

Alabama has 4% state sales tax rate, a max local sales tax rate of 7.50%, and an average combined state and local sales tax rate of 9.29%. As of September 1, 2023, the state sales tax rate for many food products has been reduced from 4% to 3%

Because Alabama also allows local governments, such as counties and cities, to impose their own sales tax rates on top of the state rate. The local sales tax rates can range from 0% to 7%, making the combined sales tax rate in Alabama anywhere from 4% to 11%.

For example, if you sell a product to a customer in Birmingham, Alabama, you have to charge them a total sales tax rate of 10%, which consists of the state rate of 4%, the county rate of 1%, and the city rate of 5%. If you sell the same product to a customer in Mobile, Alabama, you have to charge them a total sales tax rate of 9%, which consists of the state rate of 4%, the county rate of 1.5%, and the city rate of 3.5%.

To find out the exact sales tax rate for each location in Alabama, you can use AtomicTax sales tax calculator rate lookup

Not all products and services are subject to sales tax in Alabama. Some items are exempt from sales tax, such as prescription drugs, groceries, and certain agricultural products. Some services are also exempt from sales tax, such as medical, legal, and educational services.

What is Alabama internet sales tax and how does it work

Alabama’s internet sales tax, or online sales tax also known as the Simplified Sellers Use Tax is a program that allows eligible sellers to charge a total sales tax of 4% on all online purchases made by Alabama residents. .

How it Works

  • Out-of-state sellers:
    • If an out-of-state seller has a physical presence or exceeds an annual sales threshold in Alabama, they are required to collect and remit the 8% SSUT.
    • In the absence of a physical presence, the buyer is responsible for paying use tax at the same 4% rate.
  • In-state sellers: All in-state sellers must collect the SSUT on online sales delivered within Alabama.

Internet sales tax is a tax imposed on the sale of goods or services over the internet. The taxability of internet sales depends on the nexus status of the seller and the buyer, the type of product or service sold, and the delivery method. 

How are internet sales taxes determined in Alabama?

Generally, internet sales are taxable in Alabama if:

  • The seller has a physical presence or economic nexus in Alabama and the buyer is located in Alabama
  • The seller does not have a physical presence or economic nexus in Alabama but voluntarily participates in the SSUT program, and the buyer is located in Alabama
  • The seller does not have a physical presence or economic nexus in Alabama and does not participate in the SSUT program, but the buyer is located in Alabama and self-assesses and remits the use tax to the state and local governments

The tax rate for internet sales is the same as the sales tax rate for the location where the sale is sourced.

For sellers with a physical presence or economic nexus in Alabama, the sale is sourced to the destination of the shipment or delivery.

For sellers participating in the SSUT program, the sale is subject to a flat 8% use tax rate.

For buyers who self-assess and remit the use tax, the sale is sourced to the location where the product or service is first used, stored, or consumed.

Who needs to collect sales tax in Alabama?

In Alabama, businesses that have nexus with the state are required to collect sales tax. Nexus refers to establishing a sufficient connection to Alabama, which can happen through physical presence or economic activity.

  • Physical presence: Owning a store, warehouse, or any other physical location in Alabama creates nexus.
  • Economic activity: Surpassing $250,000 in annual sales within Alabama establishes economic nexus. This means even out-of-state businesses exceeding this sales threshold must collect sales tax on Alabama purchases.

Remember, Alabama also has a complex local sales tax system. So, on top of the state sales tax, you might need to register and collect taxes for specific counties and municipalities where you conduct business.

Read more on nexus here: What is Economic Nexus Threshold for Sales Tax in Each US State

3 Ways to establish Alabama sales tax nexus

  • Physical presence: You will have nexus in Alabama if you have a physical location, such as an office, warehouse, store, or inventory, in the state. You also have nexus if you have employees, contractors, agents, or representatives who work or perform services in the state.
  • Economic activity: You will have nexus in Alabama if you have a certain amount of sales or transactions in the state. As of January 1, 2019, Alabama requires online sellers who have made more than $250,000 in sales in the state in the previous calendar year to collect and remit sales tax, regardless of their physical presence. This is due to the Supreme Court’s Wayfair decision in 2018, which overturned the previous rule that required physical presence for nexus. The Wayfair decision gave states the authority to impose sales tax obligations on online sellers based on their economic activity in the state.
  • Marketplace facilitator: You will have nexus in Alabama if you sell your products or services through a marketplace facilitator, such as Amazon, eBay, Etsy, or Walmart. A marketplace facilitator is a platform that connects sellers with buyers and handles payment processing, order fulfillment, or other services. As of January 1, 2019, Alabama requires marketplace facilitators who have more than $250,000 of sales in the state in the previous calendar year to collect and remit sales tax on behalf of their sellers, regardless of their physical presence or the sellers’ nexus.

Examples of online businesses that have or do not have nexus in Alabama

1. Online Clothing Store based in Georgia

Say you have an online store that sells clothing and accessories, you are based in Georgia, and you do not have any physical presence or employees in Alabama, but you sell your products through your own website and through Amazon.

For example, in 2023, you had $300,000 of sales in Alabama, of which $200,000 were through your website and $100,000 were through Amazon. You would have nexus in Alabama because you have more than $250,000 of sales in the state, and you would have to collect and remit sales tax on the sales made through your website.

However, you do not have to collect and remit sales tax on the sales made through Amazon because Amazon is a marketplace facilitator that collects and remits sales tax on your behalf.

2. Handmade Jewelry Store based in Alabama

Say you have an online store that sells handmade jewelry, you are based in Alabama, and you have a home office and a workshop in the state. You sell your products through your own website and through Etsy.

For example, in 2023, you had $50,000 of sales in Alabama, of which $40,000 were through your website and $10,000 were through Etsy. You have a nexus in Alabama because you have a physical presence in the state, and you have to collect and remit sales tax on the sales made through your website.

However, you do not have to collect and remit sales tax on the sales made through Etsy, because Etsy is a marketplace facilitator that collects and remits sales tax on your behalf.

3. Digital Products Store, based in California

Say you have an online store that sells digital products, such as e-books, software, and online courses. You are based in California, and you do not have any physical presence or employees in Alabama, but you sell your products through your own website and through Udemy.

For example, let’s say in 2023, you had $100,000 of sales in Alabama, of which $80,000 were through your website and $20,000 were through Udemy. You would not have nexus in Alabama because you do not have a physical presence or more than $250,000 of sales in the state, and you would not have to collect and remit sales tax on any of your sales.

However, you should be aware that Alabama considers some digital products, such as software and streaming services, to be taxable, and you may have to collect and remit sales tax on them if you exceed the sales threshold in the future.

What is Alabama simplified seller use tax

Alabama’s Simplified Sellers Use Tax (SSUT) is a program designed for out-of-state sellers who don’t have a physical presence in the state but still want to collect and remit sales tax on purchases made by Alabama residents. This simplifies the process by offering a flat 8% tax rate, rather than dealing with the variations in local and state rates across Alabama. To participate, sellers must apply and be approved by the Alabama Department of Revenue.

Other benefits of the SSUT Program in Alabama

The SSUT program also provides some benefits for remote sellers, such as:

  • A 2% discount on the first $400,000 of taxes collected and remitted each month, up to a maximum of $8,000 per month
  • Amnesty for any uncollected or unpaid sales or use taxes that were due before the date of registration for the SSUT program
  • Protection from class action lawsuits related to the collection and remittance of SSUT
  • No obligation to collect and remit local sales or use taxes to the various local jurisdictions in Alabama

As a remote seller, you can apply for the SSUT program online through the Alabama Department of Revenue website. For this, you must file monthly returns and payments electronically through the My Alabama Taxes (MAT) portal.

What is Alabama remote seller sales tax

A remote seller is a seller that sells goods or services into Alabama from outside the state and does not have a physical presence or nexus in Alabama. Remote sellers may be required to collect and remit sales or use tax on their sales in Alabama if they meet certain economic thresholds.

According to Rule 810-6-2-.90.03, which took effect in January 2016, a remote seller has an economic nexus in Alabama if it has annual sales of more than $250,000 into the state based on the previous calendar year. The rule also requires the remote seller to register for the Alabama Simplified Sellers Use Tax (SSUT) program and collect and remit a flat 8% use tax on all sales made into Alabama.

How to register and apply for a sales tax permit in Alabama

Here’s a quick rundown of the process for registering for a sales tax permit in Alabama:

  1. Gather Information: Prepare your Federal Employer Identification Number (EIN), business entity type, business address, and North American Industry Classification System (NAICS) code.
  2. Register on My Alabama Taxes: Create an account on MAT and choose to register for a sales and use tax account number.
  3. Complete the Online Application: Provide your business information and answer any relevant questions.

Timeframe and Fees

  • Online registration typically takes 3-5 business days to receive your sales tax permit number.
  • There’s no fee to register for the permit itself, but other business registration fees may apply.

How to register and apply for a sales tax permit in Alabama via SSUT program

1. Determine Your Eligibility for SSUT Program

Before you can start collecting sales tax in Alabama, you need to register for a sales tax license with the Alabama Department of Revenue. There are two ways to register for sales tax in Alabama, depending on whether you qualify for the Simplified Sellers Use Tax Program (SSUT) or not.

How to qualify for the SSUT program in Alabama

To qualify for the SSUT program, you must meet the following criteria:

  • You do not have a physical presence in Alabama
  • You sell tangible personal property or services through the internet, catalog, or other remote means
  • You have annual sales in Alabama of at least $250,000 based on the previous calendar year
  • You are not otherwise obliged to collect and remit sales tax in Alabama

2. Begin the SSUT Program Registration Process

If you qualify for the SSUT program, you can register online through the SSUT Registration Portal. You will need to provide the following information:

  • Your business name, address, phone number, email, and website
  • Your federal employer identification number (FEIN) or social security number (SSN)
  • Your estimated monthly sales in Alabama
  • Your bank account information for electronic payment of the tax

Once you register, you will receive a confirmation email with your SSUT account number and instructions on how to file and pay the tax. You will also receive a SSUT certificate that you can display on your website or other sales platforms to inform your customers that you are collecting sales tax on their behalf.

3. Register for a Sales Tax Account

If you do not qualify for the SSUT program, you will need to register for a regular sales tax account with the Alabama Department of Revenue. You can register online through the My Alabama Taxes (MAT) portal. You will need to provide the following information:

  • Your entity type and FEIN
  • Your business name, address, phone number, email, and website
  • Your business activity and NAICS code
  • Your estimated monthly sales in Alabama
  • Your bank account information for electronic payment of the tax

Once you register, you will receive a confirmation number and an email with your sales tax account number and instructions on how to file and pay the tax. You will also receive a sales tax license that you must display at your place of business.

There are some benefits and drawbacks of each option that you should consider before registering for sales tax in Alabama. Here is a comparison table that summarizes the main differences between the SSUT program and the regular sales tax account:

Differences between the SSUT program and the regular sales tax account:

SSUT Program Regular Sales Tax Account
Flat 8% sales tax rate Variable sales tax rate based on the destination of the sale (4% to 11%)
No need to track and report local sales tax rates Need to track and report local sales tax rates for each jurisdiction
No need to remit tax to each local jurisdiction Need to remit tax to each local jurisdiction
Audit protection and liability relief No audit protection and liability relief
Eligibility criteria apply No eligibility criteria apply

What is the Alabama sales tax fee?

The Alabama sales tax fee is 5% of the first $100 of sales tax due and 2% of the amount over $100, up to a maximum of $400 per month. For example, if you collect $1,000 of sales tax in a month, you can deduct $25 as the sales tax fee and pay $975 to the ADOR. The Alabama sales tax fee, also known as the discount, is a percentage of the sales tax that you collect that you can keep as a reward for filing and paying your sales tax on time.

How much is an Alabama sales tax licence or permit?

The cost of registering for sales tax in Alabama is $10 for both the SSUT program and the regular sales tax account

Does Alabama sales tax license expire and how long is it valid for

Yes, Alabama sales tax licenses expire annually. This requirement came into effect on November 1, 2020. Licenses need to be renewed by December 31st of each year through the Alabama Department of Revenue’s My Alabama Taxes (MAT) portal.

The sales tax license or certificate is valid for one year and must be renewed annually. The sales tax license or certificate will expire if you fail to renew it or if you fail to file and pay the tax for two consecutive periods.

How much is Alabama sales tax license renewal fee

The renewal fee is $10 for the SSUT program and $5 for the regular sales tax account

What are Alabama sales tax requirements

  • Charge the correct sales tax rate to your customers based on the location and type of the sale
  • Keep accurate records of your sales and sales tax collections
  • File your sales tax returns on time, either online through the MAT portal or by mailing the Sales Tax Return Form
  • Pay your sales tax liability on time, either online through the MAT portal or by mailing a check or money order
  • Renew your Alabama sales tax license/permit every two years, either online through the MAT portal or by mailing the Sales Tax License Renewal Form

If you need more information or assistance on how to register for sales tax in Alabama, you can contact the Alabama Department of Revenue at the following address:

  • Phone: (334) 242-1490 or (866) 576-6531
  • Email: ssut@revenue.alabama.gov (for SSUT program) or stexempt@revenue.alabama.gov (for regular sales tax account)
  • Website: https://www.revenue.alabama.gov/sales-use/

How to collect sales tax in Alabama

After you’ve registered for sales tax in Alabama, you need to collect sales tax from your customers on each taxable sale. The sales tax rate that you have to charge depends on whether you are participating in the SSUT program or not.

1. Recognize if you’re an SSUT Program participant or not

If you are participating in the SSUT program, you have to charge a flat 8% sales tax rate on all sales made into Alabama, regardless of the destination of the shipment or the delivery. You do not have to worry about the local sales tax rates or the origin or destination-based sourcing rules. You just have to multiply the total amount of the sale by 0.08 and add it to the invoice.

For example, if you sell a product for $100 to a customer in Alabama, you have to charge them $8 in sales tax, making the total amount of the invoice $108.

If you are not participating in the SSUT program, you have to charge the sales tax rate based on the destination of the shipment or the delivery. This means that you have to apply the sales tax rate of the location where the customer receives the product or service, not where you are located or where the product originates from. You have to consider both the state and the local sales tax rates, which can vary from 4% to 11%.

For example, if you sell a product for $100 to a customer in Birmingham, Alabama, you have to charge them a total sales tax rate of 10%, which consists of the state rate of 4%, the county rate of 1%, and the city rate of 5%. The total amount of the invoice would be $110.

2. Access the exact sales tax rate for each location in Alabama

To find out the exact sales tax rate for each location in Alabama, you can use the Alabama Department of Revenue’s Sales Tax Rate Lookup tool. You just have to enter the address or the zip code of the destination, and the tool will show you the state, county, and city sales tax rates, as well as the total sales tax rate.

3. Recognize tax exempt products, services and customers

Not all products and services are subject to sales tax in Alabama. Some items are exempt from sales tax, such as prescription drugs, groceries, and certain agricultural products.

Some services are also exempt from sales tax, such as medical, legal, and educational services. You can find a list of sales tax exemptions and exclusions on the Alabama Department of Revenue’s website.
Some customers are also exempt from sales tax, such as the federal government, the state of Alabama, and some nonprofit organizations.

4. Verify customers tax exempt status

To verify the tax-exempt status of a customer, you need to obtain a copy of their sales tax exemption certificate and keep it in your records.
You can also verify the validity of an exemption certificate online through the Alabama Department of Revenue’s Exemption Certificate Verification tool.

Tips on how to handle sales tax on shipping, returns, discounts, and gift cards in Alabama

  • Shipping: Shipping charges are generally taxable in Alabama, unless they are separately stated on the invoice and the customer has the option to pick up the product or arrange their own shipping. If the shipping charges are included in the price of the product or the customer does not have a choice of the shipping method, then the shipping charges are part of the taxable sale and subject to sales tax.
  • Returns: If a customer returns a product and receives a full refund, you can also refund the sales tax that was collected on the original sale. You can then deduct the amount of the returned sale from your taxable sales on your sales tax return. However, if the customer only receives a partial refund or a store credit, you cannot refund the sales tax unless the customer uses the store credit to purchase another taxable product.
  • Discounts: Discounts that reduce the price of a product are generally not taxable in Alabama, as long as they are applied before the sales tax is calculated.

    For example, if you offer a 10% discount on a product that costs $100, you would charge sales tax on the discounted price of $90, not on the original price of $100.

    However, discounts that are reimbursed by a third party, such as a manufacturer’s coupon, are taxable, as they do not reduce the price of the product. For example, if you accept a $10 manufacturer’s coupon on a product that costs $100, you would still charge sales tax on the full price of $100, not on the net price of $90.
  • Gift cards: Gift cards are not taxable in Alabama when they are sold or purchased, as they are considered a form of payment, not a product.

    However, when a gift card is redeemed for a taxable product or service, sales tax must be charged on the transaction. For example, if a customer buys a $100 gift card and uses it to buy a $90 product, you would charge sales tax on the $90 product, not on the $100 gift card.

How to file, pay and remit sales tax in Alabama

After you collect sales tax from your customers, you need to file sales tax returns and remit the tax to the Alabama Department of Revenue. The filing and payment methods and frequency depend on whether you are participating in the SSUT program or not.

1. File and pay sales tax through the MAT portal if you are participating in the SSUT program.

If you are participating in the SSUT program, you have to file and pay sales tax online through the My Alabama Taxes (MAT) portal. You cannot file or pay by mail. You have to file and pay monthly, regardless of the amount of tax you collect.

To file and pay sales tax through the MAT portal, you need to follow these steps:

  • Log in to your MAT account using your SSUT account number and password
  • Click on the “File Return” link under the “I Want To” section
  • Select the filing period and click “Next.”
  • Enter the total amount of sales made into Alabama and click “Next.”
  • Review the summary of the tax due and click “Submit.”
  • Select the payment method (ACH debit or credit card) and enter the payment information
  • Confirm the payment and click “Submit.”
  • Print or save the confirmation page for your records

2. File and pay sales tax online If you are not participating in the SSUT program

If you are not participating in the SSUT program, you can file and pay sales tax either online or by mail. The filing and payment frequency can be monthly, quarterly, or annually, depending on the amount of tax you collect. The due date is the 20th day of the month following the reporting period. For example, the sales tax return and payment for the month of January are due by February 20th.

To file and pay sales tax online, you need to follow these steps

  • Log in to your MAT account using your sales tax account number and password
  • Click on the “File Return” link under the “I Want To” section
  • Select the filing period and click “Next”
  • Enter the total amount of sales and the taxable amount of sales for each jurisdiction where you have nexus and click “Next”
  • Review the summary of the tax due and click “Submit”
  • Select the payment method (ACH debit or credit card) and enter the payment information
  • Confirm the payment and click “Submit”
  • Print or save the confirmation page for your records

How to file and pay alabama sales tax by mail

To file and pay sales tax by mail, you need to follow these steps:

  • Download and print the sales tax return form (Form 2100 for monthly filers, Form 2105 for quarterly filers, or Form 2115 for annual filers) from the Alabama Department of Revenue’s website
  • Fill out the form with the required information, such as your sales tax account number, business name, address, filing period, total sales, taxable sales, tax rates, and tax due for each jurisdiction where you have nexus
  • Sign and date the form
  • Write a check or money order payable to the Alabama Department of Revenue for the amount of tax due
  • Mail the form and the payment to the following address: Alabama Department of Revenue Sales and Use Tax Division P.O. Box 327790 Montgomery, AL 36132-7790

Alabama sales tax return due date

The due date is the 20th day of the month following the reporting period. For example, the sales tax return and payment for the month of January are due by February 20th.

Common mistakes to avoid when filing and paying Alabama sales tax

Here are some of the most frequent errors that taxpayers make and how to prevent them:

  1. Filing late or not filing at all. You should file and pay your sales tax on time, even if you have no sales or no tax due for the reporting period. The due date is the 20th day of the month following the end of the reporting period, unless it falls on a weekend or a holiday, in which case the due date is the next business day. If you file or pay late, you will be subject to penalties and interest. If you fail to file or pay for two consecutive periods, your sales tax license or certificate may expire.
  2. Filing under the wrong account number or name. You should use the correct sales tax account number and business name that match the information on your sales tax license or certificate. If you have multiple sales tax accounts, you should file a separate return for each account. If you change your business name, address, or ownership, you should notify the Alabama Department of Revenue and update your sales tax account information.
  3. Reporting sales under the wrong tax rates or categories. You should use the correct sales tax rate for each location where you made sales in Alabama. You can use the Sales Tax Rate Lookup tool on the department’s website to find the state, county, and city sales tax rates by entering the address or the zip code of the destination. You should also report your sales under the appropriate tax categories, such as general sales, automotive sales, vending machine sales, etc. You can find a list of tax categories and their definitions on the department’s website.
  4. Failing to report sales tax exemptions or exclusions correctly. You should keep records of your sales tax exemptions or exclusions, such as sales to the government, sales to nonprofit organizations, sales of agricultural products, etc. You should also verify the validity of your customers’ exemption certificates online or by phone. You should report your exempt or excluded sales on your sales tax return and deduct them from your taxable sales.
  5. Failing to report sales tax on withdrawals, discounts, or shipping charges correctly. You should report sales tax on withdrawals of inventory for personal or business use, as if you sold them at retail price. You should report sales tax on discounts that are reimbursed by a third party, such as a manufacturer’s coupon, but not on discounts that reduce the price of the product, such as a store coupon. You should report sales tax on shipping charges that are included in the price of the product or that the customer does not have a choice of, but not on shipping charges that are separately stated and optional.

Alabama sales tax filing frequency and penalties for missed filing and payment

If you file or pay late, you will be subject to a penalty of 10% of the tax due or $50, whichever is greater. You will also be charged interest at the rate of 1% per month or a fraction thereof from the due date until the date of payment.

Table of Alabama sales tax filing deadlines: quarterly due dates

Quarterly Period Due Date
January – March April 20
April – June July 20
July – September October 20
October – December January 20

Table of Alabama sales tax filing deadlines: monthly due dates

Monthly Period Due Date
January February 20
February March 20
March April 20
April May 20
May June 20
June July 20
July August 20
August September 20
September October 20
October November 20
November December 20
December January 20

Alabama sales tax resale certificate

A resale certificate is a document that allows a business to purchase goods or services from another business without paying state sales tax. The resale certificate is the seller’s evidence that the buyer intends to resell the goods or services and not use them for their own consumption.

Resale certificates are also known as sales tax permits, reseller numbers, reseller permits, seller’s permits, sales tax exemption certificates, or reseller’s licenses.

Alabama is one of the few states that do not have a separate resale certificate. Instead, an Alabama business that wants to buy goods or services for resale will provide a copy of their Alabama Sales Tax License to the seller.

The Alabama Sales Tax License is the same document that a business needs to register for sales tax in Alabama. The license shows that the business is authorized to collect and remit sales tax to the state, and also to purchase goods or services for resale without paying sales tax.

How to apply for Alabama sales tax resale certificate

  • Register online via my Alabama taxes (MAT) portal
  • Fill out the paper application via mail

Alabama resale certificate application fee and validity

The application process is free and the license is valid for one year.

Alabama resale certificate renewal process and fee

The license must be renewed annually and the renewal fee is $5

How to calculate Alabama sales tax

The sales tax rate in Alabama is 4%, but this is only the state sales tax rate. Local sales tax rates also apply in most cities and counties, and these can range from 0% to 7%. Therefore, the total sales tax rate in Alabama can vary from 4% to 11%, depending on the location of the sale.

To calculate the sales tax amount and the total price of a purchase, you need to follow these steps:

  • Find the sales tax rate for the location where the sale takes place.
  • Add up the state, county, and city sales tax rates to get the total sales tax rate for the location.
  • Multiply the total sales tax rate by the price of the item to get the sales tax amount.
  • Add the sales tax amount to the price of the item to get the total price of the purchase.

Examples of how to calculate sales tax in Alabama for different scenarios

  1. You buy a book for $15 at a bookstore in Montgomery, Alabama. The sales tax rate for Montgomery is 10%, which consists of the state rate of 4%, the county rate of 2.5%, and the city rate of 3.5%. The sales tax amount is $15 x 0.10 = $1.50. The total price of the purchase is $15 + $1.50 = $16.50.
  2. You buy a laptop for $1,000 online from a seller in Huntsville, Alabama, and have it shipped to your home in Mobile, Alabama. The sales tax rate for Mobile is 9%, which consists of the state rate of 4%, the county rate of 1.5%, and the city rate of 3.5%. The sales tax amount is $1,000 x 0.09 = $90. The total price of the purchase is $1,000 + $90 = $1,090.
  3. You buy a pair of shoes for $50 at a mall in Hoover, Alabama. The sales tax rate for Hoover is 9.5%, which consists of the state rate of 4%, the county rate of 1%, and the city rate of 4.5%. The sales tax amount is $50 x 0.095 = $4.75. The total price of the purchase is $50 + $4.75 = $54.75.

To calculate your sales tax liability in Alabama, you need to know the following information:

How to calculate Alabama sales tax liability 

  • The total amount of your taxable sales in Alabama for the reporting period
  • The sales tax rate for each location where you made sales in Alabama
  • The amount of sales tax you collected from your customers in Alabama
  • The amount of sales tax you paid to your suppliers or vendors in Alabama
  • The amount of any deductions or exemptions that apply to your business in Alabama

The basic formula for calculating your sales tax liability in Alabama is:

Sales tax liability = (Taxable sales x Sales tax rate) – (Sales tax collected + Sales tax paid + Deductions + Exemptions)

However, this formula may vary depending on whether you are participating in the Simplified Sellers Use Tax (SSUT) program or not. The SSUT program allows eligible online sellers to collect and remit a flat 8% sales tax rate on all sales made into Alabama instead of tracking and reporting the varying local sales tax rates.

If you are in the SSUT program, you do not need to report your sales by location, and you do not qualify for most deductions or exemptions. 

Therefore, the formula for calculating your sales tax liability in the SSUT program is:

Sales tax liability = (Taxable sales x 0.08) – Sales tax collected

Alabama sales tax holiday and exemption

Alabama is one of the states that offer sales tax holidays to its residents. A sales tax holiday is a period of time when certain items are exempt from the state sales tax, usually for a specific purpose or occasion. Alabama has two sales tax holidays: one for back-to-school shopping in July, and one for severe weather preparedness in February.

The back-to-school sales tax holiday begins at 12:01 a.m. on the third Friday in July and ends at midnight on the following Sunday. During this time, the state waives its 4% sales tax on school-related supplies and clothing, such as books, backpacks, uniforms, and computers. More than 350 cities and counties in Alabama also waive their local taxes on these items.

The severe weather preparedness sales tax holiday begins at 12:01 a.m. on Friday of the last full weekend in February and ends at midnight on the following Sunday. During this time, the state waives its 4% sales tax on items that can be used to prepare for or recover from a natural disaster, such as batteries, flashlights, generators, and fire extinguishers. More than 325 cities and counties in Alabama also waive their local taxes on these items.

To participate in the sales tax holidays, a county or municipality must adopt a resolution or ordinance at least 30 days prior to the weekend of the event and notify the Alabama Department of Revenue. The department maintains a list of participating localities on its website

What is Alabama sales tax exemption

A sales tax exemption is a legal provision that allows certain entities or transactions to be free from the state sales tax. Alabama grants sales tax exemptions to various types of organizations and activities, such as:

  • Sales to the federal government, the state of Alabama, and other governmental agencies of the state
  • Sales to schools (not daycares) within the state
  • Sales to city- and county-owned and operated hospitals and nursing homes
  • Sales to some nonprofit agencies that have been specifically exempted by the Alabama Legislature, such as Alabama Sheriffs Boys Ranch, Boy Scouts and Girl Scouts of America, etc.
  • Sales of certain items that are used for agricultural or industrial purposes, such as fertilizer, insecticides, seeds, feed, livestock, etc.
  • Sales of prescription drugs, gasoline, motor oil, and some other products that are subject to other taxes or fees
  • Sales of labor to repair or install property, as long as it is billed separately from the materials
  • Sales paid for with food stamps
  • Wholesale sales (sales for resale) to licensed retail merchants, jobbers, dealers, or other wholesalers

What is Alabama sales tax exemption certificate

An Alabama sales tax exemption certificate is a document that proves that a person, firm, or corporation is eligible for a sales tax exemption. The certificate must be presented to the seller at the time of purchase, and the seller must keep a copy of the certificate for at least three years.

There are two types of sales tax exemption certificates in Alabama: one for wholesalers, manufacturers, and other product-based exemptions (Form ST: EX-A1), and one for statutorily exempt entities (Form ST: EX-A1-SE). The forms can be found on the Alabama Department of Revenue website, and must be completed and sent to the appropriate office for approval.

How to register and apply for Alabama sales tax exemptions

To register and apply for Alabama sales tax exemptions, you must follow these steps:

Determine if you qualify for a sales tax exemption based on your type of organization or activity.

You may have to refer to the Alabama Sales Tax Rules and Regulations for more details on the eligibility criteria and the documentation required because this changes quite often.

Complete the appropriate application form for your exemption category

You can download the form from the Alabama Department of Revenue website, or request a paper copy by calling 334-242-1490. The form will ask for information such as your federal employer identification number, business name and address, contact person, kind and class of business, type of product manufactured or sold, and reason for exemption

Submit the application form along with any supporting documents to the relevant office.

If you are applying for a product-based exemption, you must mail the form to the Taxpayer Service Center that serves your county. If you are applying for a statutory exemption, you must email the form to stexemptionunit@revenue.alabama.gov or mail it to the Sales and Use Tax Division, Exemption Unit, P. O. Box 327710, Montgomery, AL 36132-77109.

Wait for the approval of your application.

The department will review your application and issue a sales tax exemption certificate if you meet the requirements. The certificate will have an expiration date, and you must renew it before it expires to continue enjoying the exemption

Alabama sales tax exemption certificate renewal

A sales tax exemption certificate is valid for one year from the date of issuance, and must be renewed annually before the end of the month in which it expires. To renew your sales tax exemption certificate, you have two options:

  • Submit a new application form with the same information and documents as before. You can use the same form that you used for the initial application and send it to the same office that issued your certificate.
  • Send an email request to stexemptionunit@revenue.alabama.gov to renew your certificate. You can do this only if you have an application on file with the department that is less than three years old and the information is still current. You must include your name, business name, address, and exemption number in the email.

How to verify Alabama sales tax exemption certificates

There are two ways to verify the validity of an exemption certificate in Alabama:

  • Use the online verification tool on the My Alabama Taxes portal. You can access the tool from the home page, under the “I want to…” section, by clicking on “Verify Exemption Certificate.”. You will need to enter the exemption number and the expiration date of the certificate, and the tool will display the verification status immediately.
  • Contact the Sales and Use Tax Division, Exemption Unit, by phone or email. You can call 334-242-1490 or email stexemptionunit@revenue.alabama.gov to request a verification of an exemption certificate. You will need to provide the exemption number and the name of the buyer, and the unit will respond with the verification status as soon as possible

Non-taxable services in Alabama

Services in Alabama are generally not taxable, unless they involve creating or manufacturing a product. This means that most professional, personal, and repair services are exempt from sales tax, such as:

  • Accounting
  • Advertising
  • Barbering
  • Consulting
  • Dry cleaning
  • Education
  • Engineering
  • Health care
  • Legal
  • Photography
  • Real estate
  • Transportation
  • Etc.

Taxable services in Alabama

  • Admissions to entertainment or amusement events, such as movies, concerts, sports, etc.
  • Linen rentals, such as tablecloths, napkins, towels, etc.
  • Printing, engraving, or embossing, such as business cards, flyers, invitations, etc.
  • Software development, installation, or maintenance, such as custom or canned software, updates, or repairs
  • etc.

Taxable goods in alabama

Some examples of taxable goods are:

  • Books
  • Clothing
  • Furniture
  • Electronics
  • prepared food
  • Candy
  • Soda,
  • Cigarettes,
  • Beer, and
  • Gasoline.

However, some goods may qualify for a reduced sales tax rate, such as

  • Groceries,
  • Prescription drugs
  • Farm equipment and supplies.

Non-taxable goods in alabama

Some goods are exempt from sales tax in Alabama, either for all consumers or for certain categories of purchasers.

Some examples of exempt goods are:

  • Seeds and plants for food production,
  • Feed and livestock for agricultural purposes,
  • Baby chicks and poults,
  • Prescription drugs,
  • Gasoline and motor oil,
  • Sales to the federal, state, or local government, and
  • Sales to some nonprofit organizations.

However, some goods that are exempt from sales tax may be subject to use tax, which is imposed on the storage, use, or consumption of tangible personal property in Alabama that was purchased tax-free from an out-of-state seller

Is SaaS taxable in Alabama

In Alabama, SaaS is considered a taxable service, as it involves the creation or manufacturing of a product. SaaS is subject to the state sales or use tax as well as the local sales or use tax, unless a specific exemption applies. 

The tax rate for SaaS is the same as the tax rate for the sale of tangible personal property in the location where the sale is sourced.

How SaaS sales tax is determined in Alabama

The sourcing of SaaS sales depends on the nexus status of the seller and the buyer and the delivery method of the service. Generally, SaaS sales are sourced as follows:

  • If the seller has a physical presence or economic nexus in Alabama and the buyer is located in Alabama, the sale is sourced to the destination of the delivery of the service, which is usually the buyer’s address or location of use
  • If the seller does not have a physical presence or economic nexus in Alabama but voluntarily participates in the SSUT program and the buyer is located in Alabama, the sale is subject to a flat 8% use tax rate
  • If the seller does not have a physical presence or economic nexus in Alabama and does not participate in the SSUT program, and the buyer is located in Alabama, the sale is sourced to the location where the service is first used, stored, or consumed, and the buyer is responsible for self-assessing and remitting the use tax to the state and local governments

How Alabama sales tax on shipping charges work

In Alabama, shipping charges are subject to sales or use tax if the delivery is made in the seller’s own vehicle or in equipment leased by the seller. If the delivery is made by a common carrier or the U.S. Postal Service, the shipping charges are exempt from sales or use tax if they are billed as a separate item and paid directly or indirectly by the buyer. Shipping charges that are included in the sale price are not excluded from tax.

What is the sales tax rate for Alabama shipping charges

The tax rate for shipping charges is the same as the tax rate for the sale of the goods or services being shipped. The tax rate is determined by the location where the sale is sourced, which is usually the destination of the shipment or delivery.

Shipping charges are the fees charged by a seller or a carrier for the delivery of goods or services to a buyer. Shipping charges may include freight, postage, handling, insurance, or other costs related to the transportation of the goods or services.

What is Alabama sales tax token

A sales tax token is a small coin that was issued by some states in the US during the 1930s and 1940s to facilitate the collection of sales tax on small purchases. Alabama issued sales tax tokens in two denominations: 1 mill and 5 mills, which were equivalent to 1/10 and 1/2 of a cent, respectively.

These tokens could be used to pay sales tax on purchases of 10 cents or less or to receive change from a sales tax payment.

Alabama discontinued the use of sales tax tokens in 1948, and they are now considered collectible items by numismatists.

What is Alabama sales tax id

A sales tax ID is a number that identifies a business as a registered seller of taxable goods or services in Alabama. A business must obtain a sales tax id from the Alabama Department of Revenue before making any sales in the state.

A sales tax ID is also required for collecting and remitting other taxes, such as rental tax, lodgings tax, sellers use tax, consumer use tax, and utility tax.

What is Alabama sales tax number

A sales tax number is another term for a sales tax ID, which is a number that identifies a business as a registered seller of taxable goods or services in Alabama.

Additionally, a business may have nexus in Alabama if it is organized or commercially domiciled in the state, or if it engages in activities that go beyond the mere solicitation of sales that are protected by Public Law 86-27229.

What is Amazon’s sales tax

Amazon is an online marketplace that sells and ships products to customers in various states and countries, including Alabama.

Amazon started collecting sales tax on its own sales in Alabama as of November 2016, as part of the Simplified Sellers Use Tax (SSUT) program, which allows eligible sellers to remit a flat 8% sales tax to the state instead of collecting and remitting varying local sales taxes.

However, not all products sold on Amazon are subject to sales tax, as some products are sold by third-party retailers that may or may not participate in the SSUT program or have nexus in Alabama.

Therefore, customers in Alabama may see different sales tax rates or no sales tax at all applied to their purchases on Amazon, depending on the identity and location of the seller.

2024 Alabama county sales tax rates lookup and zip codes table

County Number of Zip Codes Range of Zip Codes Sales Tax Rate
Autauga 9 36003 – 36091 10%
Baldwin 25 36507 – 36580 11%
Barbour 18 36005 – 36089 9.5%
Bibb 7 35034 – 36793 10%
>Blount 18 35013 – 35133 12%
Bullock 5 36029 – 36089 10%
Butler 9 36030 – 36456 10%
Calhoun 19 36201 – 36279 10%
Chambers 11 36850 – 36863 10%
Cherokee 8 35959 – 35984 10%
Chilton 11 35004 – 35171 11%
Choctaw 9 36904 – 36922 10%
Clarke 14 36425 – 36585 10%
Clay 6 36251 – 36266 9.5%
Cleburne 6 36262 – 36275 9%
Coffee 11 36010 – 36351 10%
Colbert 11 35610 – 35677 10%
Conecuh 9 36401 – 36475 10%
Coosa 4 35014 – 35136 10%
Covington 15 36028 – 36483 10%
Crenshaw 7 36009 – 36071 10%
Cullman 18 35019 – 35572 10%
Dale 11 36310 – 36362 10%
Dallas 11 36701 – 36786 10%
DeKalb 17 35739 – 35988 11.5%
Elmore 15 36020 – 36092 10.5%
Escambia 11 36426 – 36567 11%
Etowah 15 35901 – 35990 12%
Fayette 7 35542 – 35594 9.5%
Franklin 9 35543 – 35585 10%
Geneva 10 36316 – 36375 9.5%
5 35441 – 35491 10%
Hale 7 36732 – 36768 10%
>Henry 7 36017 – 36370 10%
Houston 12 36301 – 36376 10%
Jackson 17 35740 – 35776 9%
Jefferson 51 35005 – 35298 10%
Lamar 6 35544 – 35586 9.5%
Lauderdale 14 35630 – 35677 9.5%
Lawrence 9 35540 – 35673 10%
Lee 14 36801 – 36879 10%
Limestone 12 35611 – 35773 10.5%
Lowndes 7 36032 – 36752 10.5%
Macon 9 36039 – 36088 11.5%
Madison 23 35741 – 35899 10.5%
Marengo 10 36722 – 36784 10%
Marion 10 35540 – 35587 11%
Marshall 14 35016 – 35986 12.5%
Mobile 25 36505 – 36695 10%
Monroe 10 36439 – 36482 10%
Montgomery 25 36043 – 36191 10%
Morgan 15 35049 – 35673 9%
Perry 5 36738 – 36790 10%
Pickens 9 35442 – 35592 10%
Pike 9 36005 – 36081 10%
Randolph 7 36258 – 36280 10%
Russell 9 36855 – 36875 9.75%
Shelby 18 35007 – 35188 12%
St Clair 15 35004 – 35182 10%
Sumter 9 35447 – 36925 11%
Talladega 14 35014 – 36268 10%
Tallapoosa 10 35010 – 36866 10%
Tuscaloosa 18 35401 – 35490 10%
Walker 17 35038 – 35587 10%
Washington 7 36518 – 36586 10%
Wilcox 8 36720 – 36785 11%
Winston 10 35540 – 35577 10%

2024 Alabama cities sales tax rate lookup and zip codes table

City Zip Codes Sales Tax Rate Special Sales Tax Rate Combined Sales Tax Rate
Birmingham 35201 – 35299 10% 1% for food and beverages 11%
Montgomery 36101 – 36191 10% 2.5% for admissions to places of amusement and entertainment 12.5%
Mobile 36601 – 36695 10% 1% for food and beverages 11%
Huntsville 35801 – 35899 9% None 9%
Tuscaloosa 35401 – 35490 10% None 10%
Hoover 35216, 35226, 35236, 35242, 35244 9% None 9%
Dothan 36301 – 36305 9% None 9%
Decatur 35601 – 35699 9% None 9%
Auburn 36830 – 36832, 36849 10% None 10%
Madison 35756 – 35758 9% None 9%

Conclusion

We hope this blog post has helped you understand everything you need to know about Alabama sales tax, from knowing who needs to collect sales tax in the state to understanding how to register, collect, file, and remit the sales tax collected and also knowing when to observe a tax holiday in the state.

To help you comply with Alabama sales tax laws, here is a checklist of the steps that you should follow:

Alabama sales tax compliance checklist

  • Determine if you have nexus in Alabama based on your physical presence, economic activity, or marketplace facilitator status
  • Register for sales tax in Alabama, either through the SSUT program or the regular sales tax account, depending on your eligibility
  • Obtain a sales tax license or certificate from the Alabama Department of Revenue and display it at your place of business
  • Collect sales tax from your customers on each taxable sale, either at a flat 8% rate (if you are in the SSUT program) or at a variable rate based on the destination of the sale (if you are not in the SSUT program)
  • File and pay sales tax returns to the Alabama Department of Revenue on a monthly, quarterly, or annual basis, depending on your filing frequency, either online or by mail
  • Renew your sales tax license or certificate annually before it expires
  • Keep records of your sales, purchases, invoices, receipts, exemption certificates, and other relevant documents for at least three years
  • Verify the validity of your customers’ exemption certificates online or by phone
  • Apply for sales tax exemptions if you qualify for any of the categories or activities that are exempt from sales tax in Alabama
  • Participate in the sales tax holidays if you sell items that are eligible for the tax-free periods
  • Avoid common mistakes when filing and paying sales tax, such as filing under the wrong account number, reporting sales under the wrong tax rates, or failing to report sales tax exemptions correctly

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