This blog was last updated on November 18, 2025
Alabama Sales Tax Rate
Alabama imposes a statewide sales and use tax rate of 4.0 %. The state imposes local taxes at county, city and police jurisdiction levels and allows local jurisdictions to levy additional sales taxes, which vary by location.
Alabama also offers a Simplified Sellers Use Program, allowing qualifying out-of-state sellers to collect a flat all-inclusive rate for state and local taxes.
What’s Taxable in Alabama?
Alabama sales and use tax applies to the sale of tangible personal property and certain enumerated services. Sellers selling taxable goods and/or services are required to collect and remit sales tax to the state.
Examples of taxable items include:
- Clothing
- Prewritten computer software
- Non-prescription drugs and supplements
Sales Tax Nexus in Alabama
A seller is liable to collect and remit Alabama sales tax if they meet the state’s nexus requirements. Nexus can be established through either physical or economic presence.
Alabama: Physical Nexus
Physical presence is created by having a business location, office, warehouse, vehicle, employee, or other representative operating in the state of Alabama.
Alabama: Economic Nexus
Alabama enforces economic nexus for remote sellers. If your business has:
- $250,000 in sales or more during the previous calendar year,
you may be required to register for and collect Alabama sales tax.
Learn more at ADOR Announces Sales and Use Tax Guidance for Online Sellers.
Alabama Sales Tax Exemptions
Certain sales in Alabama are considered generally exempt from the sales and use tax requirements.
Are there any items exempt from sales tax in Alabama?
Examples of exempt products include the following:
- Most services, unless state statutes specify otherwise
- Qualifying agricultural items
- Prescription drugs and medical equipment
Entity or Use Based Exemptions
Additionally, Alabama exempts sales to specific entities from the sales/use tax. Please reference the comprehensive list of statutorily exempt entities here.
How to Claim Sales Tax Exemption in Alabama
To claim an exemption, an entity must provide an exemption certificate with the sale. The DOR accepts Form – ST: EX-A1.
Additional guidance on acceptable exemption formats can be found at Alabama Additional Exemption Forms
Alabama Filing and Remittance Requirements
Alabama offers multiple methods for filing and remitting sales and use tax:
- E-filing through Alabama (My Alabama Taxes)
- Filings and Payments are done through MATS (My Alabama Taxes)
- Paper filing – Some locals in Alabama do allow paper returns, but not all localities
- Primary filing and remitting taxes are done through MATS
Pursuant to Section 41-1-20, Code of Alabama 1975, on each occasion that a business taxpayer is obligated to make a tax payment of $750 or more to the Alabama Department of Revenue, such payment must be remitted electronically through an electronic funds transfer (EFT) method. Voluntary participation of transactions of less than $750 is encouraged. EFT Threshold (EFT ACH Credit Payment Method)
Please note that there are different administering agents in Alabama:
- State Administered jurisdictions
- Self-Administered jurisdictions
- Avenu Insights
- PReMA Corp
- Sales Tax Auditing Collection Services
Frequently Asked Questions
Is Alabama a part of the Streamlined Sales Tax (SST) initiative?
No, Alabama is NOT part of the Streamlined Sales Tax (SST) initiative, a multi-state agreement designed to simplify and standardize sales tax rules. More information concerning SST may be found here.
Does Alabama have sales tax holidays?
Yes, Alabama has two annual sales tax holidays.
The Severe Weather Preparedness sales tax holiday takes place annually in February and The Back-to-School Sales Tax Holiday takes place annually in July. More information can be found here.
Are there any special point of sale fees in Alabama?
Point-of-sale fees are fixed amount or rate-based assessments levied on certain products or services at the time of sale and paid by the final consumer at retail. For example, Alabama imposes the following point of sale fees:
How do I register for a sales tax permit in Alabama?
Alabama businesses or individuals selling tangible personal property or certain services to Alabama consumers may need to register to collect sales tax when meeting qualifying requirements. More information may be found here.
Does Alabama collect sales tax on online purchases?
Yes, out-of-state sellers who meet the economic nexus threshold mentioned above collect sales taxes for products purchased online for delivery into Alabama.
How can businesses calculate the correct sales tax in Alabama?
The local sales tax on Alabama sales will vary according to city, county, and police jurisdiction. To view applicable rates, you may consult the DOR’s web page here.
What is the sales tax rate on cars in Alabama?
Alabama has a 2% state-level rate on cars. The additional local sales tax on Alabama car sales will vary according to city, county, and police jurisdiction. To view applicable rates, you may consult the DOR’s web page here.
Additional Resources
For more information on U.S. sales tax compliance across all 50 states, check out our:
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