The Alabama state sales tax rate is currently 4%. Local taxes may add up to 7% extra, resulting in a maximum combined rate of 11%. Sales tax is imposed on certain goods and services and is paid to the state or local government.
Filing Sales Tax
The Alabama Department of Revenue requires online sellers to file sales tax through My Alabama Taxes. Cities and counties in Alabama can levy additional local sales taxes of up to 7%.
Sales Tax Calculation
State and Local Rates
- The state sales tax rate in Alabama is 4%, with the potential for an additional 7% in local taxes, leading to a total possible rate of 11%.
Exemptions and Taxation on Goods
- Alabama taxes groceries at the full 4% rate without exemptions or rebates, making it one of the few states that entirely tax groceries.
- The sales tax rate on clothing in Alabama is the standard 4% state rate plus any applicable local taxes.
Compliance and Automation
If your business operates within Alabama, you are responsible for collecting both state and local sales taxes on taxable goods and services. Automating this process through sales tax software ensures accurate calculation, filing, and payment of owed taxes.