Alabama Sales Tax Guide 2025: Compliance, Rates, Guidelines

This Alabama Sales Tax Guide breaks down the essentials of the state’s tax laws, including rates and exemptions. Use it to streamline your compliance process and stay on track.

Alabama Sales Tax

Sales tax in Alabama was introduced in 1936 to generate state revenue and remains a vital part of the state’s economy. In 1939, Alabama Department of Revenue was established to Under Alabama sales tax law, the state imposes a 4% base rate, with additional local taxes, and administers the Alabama sales and use tax to cover taxable goods and out-of-state purchases.

Alabama Sales Tax Rate

Jurisdiction	Sales tax rate
State tax	4.0%
Local tax	0.0%-7.0%
Combined Tax	4.0% - 11.0%

Learn more and check out the city-based tax rates in Alabama.

Alabama Sales Tax Calculator

An Alabama sales tax calculator is a valuable tool for retailers to ensure accurate tax collection and compliance with state and local tax regulations. Sales tax in Alabama has a base rate of 4%, but combined rates, including city and county taxes, can range significantly depending on the location.

For example: A retailer in Alabama sells a taxable item for $500 in a city with an additional 3% local sales tax and a 2% county tax. Here’s how to calculate the total sales tax:

1. State Sales Tax Rate: 4% of $500 = $20
2. City Sales Tax Rate: 3% of $500 = $15
3. County Sales Tax Rate: 2% of $500 = $10
4. Total Sales Tax: $20 + $15 + $10 = $45

Total Price Charged to Customer: $500 + $45 = $545

Using an Alabama sales tax calculator, retailers can easily compute the correct tax rate for each transaction, ensuring compliance with Alabama sales tax law and avoiding errors in tax collection.

FAQs on Sales Tax Rate

What is the tax rate in Alabama?

Alabama's state sales tax rate is 4%, but local jurisdictions can impose additional rates, resulting in combined rates as high as 10% or more in some areas.

What is Alabama sales tax rate?

The base sales tax rate in Alabama is 4%, with additional local taxes varying by city or county.

How to calculate Alabama sales tax?

Multiply the item price by the combined sales tax rate (state + local rates) for your location. For example, $100 × 10% = $10 tax.

Does Alabama have 10% sales tax?

Yes, some cities and counties in Alabama have combined state and local sales tax rates of 10% or higher.

Why is Alabama sales tax so high?

Alabama has a low base state rate of 4%, but high local sales tax rates contribute to higher overall combined rates in some areas.

What is the sales tax in Alabama retail?

Retail sales tax in Alabama includes the 4% state rate plus any applicable local taxes, varying by location.

How to calculate Alabama sales tax?

Determine the combined tax rate for your area and multiply it by the item's price to calculate the total sales tax owed.

Sales Tax Nexus in Alabama Sales​

Type of Nexus	Threshold
Physical Nexus	Any physical presence
Economic Nexus	$250,000 in sales

FAQs on Sales Tax Nexus

Does Alabama have sales tax nexus?

Yes, Alabama has sales tax nexus, which is established when a business has a physical presence in the state or meets economic nexus thresholds, such as $250,000 in annual sales to Alabama customers.

What are the Nexus rules for sales tax in Alabama?

Nexus rules require businesses with a physical presence (e.g., store, warehouse, or employees) or economic nexus (over $250,000 in annual sales) to register, collect, and remit sales tax in Alabama.

Alabama Sales Tax Exemptions​

Alabama offers sales tax exemptions for specific goods, services, and entities, such as manufacturing equipment, agricultural supplies, and nonprofit organizations. These exemptions, managed by the Alabama Department of Revenue, help businesses reduce costs and comply with state tax regulations.

How to obtain an Alabama sales tax exemption certificate?

To obtain an Alabama sales tax exemption certificate, businesses must complete the appropriate application form through the Alabama Department of Revenue and provide documentation proving eligibility. Once approved, the certificate can be used to claim exemptions on qualifying purchases. Learn more about certificate of exemptions in Alabama.

What items qualify for Alabama sales tax exemption​?

Items such as goods for resale, manufacturing machinery, agricultural supplies, and certain medical equipment qualify for sales tax exemption in Alabama. Eligibility depends on the item's use and compliance with state exemption criteria. Learn more about Alabama sales tax exemption rules and benefits.

Is SaaS taxable in Alabama?

Yes, SaaS (Software as a Service) is generally taxable in Alabama as it is classified under tangible personal property for sales tax purposes.

Does Alabama have sales tax on clothes?

Yes, Alabama applies its sales tax to clothing purchases at the state rate of 4%, plus any applicable local taxes. Check out the sales tax and use tax rates in Alabama.

How to get sales tax exemption in Alabama?

Businesses can obtain a sales tax exemption certificate by applying through the Alabama Department of Revenue and providing documentation proving eligibility for exemptions.

Is there sales tax on clothing in Alabama?

Yes, clothing is subject to sales tax in Alabama, including the base state rate and local taxes.

Are SaaS services taxable in Alabama?

Yes, SaaS services are taxable in Alabama as they are considered taxable digital products under the state’s sales tax law.

What is exempt from sales tax in Alabama?

Common exemptions include goods purchased for resale, manufacturing machinery, agricultural supplies, and certain medical equipment. Eligibility depends on the use and state regulations.

Alabama Sales Tax Filing

Filing sales tax returns in Alabama is a requirement for businesses that collect sales tax from transactions involving Alabama residents. Businesses must report taxable and non-taxable sales and remit the taxes collected to the Alabama Department of Revenue by their assigned filing frequency (monthly, quarterly, or annually). Accurate and timely filing ensures compliance with state regulations and helps avoid penalties.

What are the Alabama sales filing requirements?

Businesses must file sales tax returns based on their assigned filing frequency (monthly, quarterly, or annually) and report all taxable and exempt sales. Returns must also include remittance of taxes collected from Alabama residents.

How to get late filing penalties waived for Alabama sales tax?

To request a waiver for late filing penalties, you must submit a written appeal to the Alabama Department of Revenue, providing a valid reason for the delay, such as unforeseen circumstances. Approval is at the discretion of the department based on the evidence provided.

Do I need a sales tax license in Alabama?

Yes, any business making taxable sales in Alabama must obtain a sales tax license from the Alabama Department of Revenue to collect and remit sales tax legally.

What is the deadline to file Alabama taxes?

The deadline to file sales tax returns in Alabama is the 20th day of the month following the reporting period.

What is the filing frequency for sales tax in Alabama?

Filing frequency in Alabama—monthly, quarterly, or annually—is determined by the business’s average tax liability. Higher tax liabilities require more frequent filings.

Alabama Sales Tax Due Date​

Filing Frequency	Due Date
Monthly	Every 20th of the following month (Ex. Due date for January is February 20)
Quarterly	Every 20th of the month following the quarter’s end. (Ex. Due date for Q1 (January 1 – March 31) is April 20)
Annually	January 20 of the following year.

What is the due date for Alabama business privilege tax?

The Alabama business privilege tax is due annually by the 15th day of the third month following the start of the business’s fiscal year.

What is the penalty for late sales tax payment in Alabama?

Alabama imposes a penalty of 10% of the tax due or $50, whichever is greater, for late sales tax payments, in addition to interest on unpaid amounts.

How to get late filing penalties waived for Alabama sales tax?

Submit a written equest to the Alabama Department of Revenue explaining the reason for the delay, along with any supporting documentation. Approval depends on the department’s review of the provided justification.

When are Alabama sales taxes due if the date is Sunday?

If the due date falls on a Sunday or a state-recognized holiday, sales taxes are due on the next business day.

Alabama Sales Tax Revenue Service

For any concerns about Alabama sales tax registration, filing or general inquiries, you can reach out to them through the following:

• Registration for Business Accounts: 334-242-1584
• Sales & Use Tax (General Info): 334-242-1490 (General Info) or
• Sales and & Use Tax (Paperless Filing Info): 1-866-576-6531
• Website: https://www.revenue.alabama.gov/

This guide has everything you need about Alabama sales tax. If you find the whole process complicated Kintsugi can make compliance effortless—sign up or request a demo now.