Alabama Consumer Tax Laws
All states collect what are referred to as consumer taxes, which include taxes on retail purchases, cigarettes, gasoline, liquor, and other items. While a small minority of states don't collect sales tax at all, they typically make up for it with personal income taxes, business taxes, or other means of generating revenue. Taxes on tobacco products, liquor, gambling, and other products considered "vices" or contrary to the public good are often taxed at a much higher rate in order to discourage their use.
Consumer Taxes in Alabama
Like most states, Alabama levies "sin" taxes on sales of cigarettes, alcoholic beverages, and gasoline. While gambling is permitted in the state, at least in a limited manner, winnings are taxed as personal income. Alabama has one of the lowest cigarette tax rates in the country, but among the highest alcohol tax rates. As a so-called "liquor monopoly state," Alabama only permits the sale of alcoholic beverages through state-run outlets.
The current tax rates for various consumer goods and transactions are listed in the following table. See FindLaw's Tax Law section for additional articles.
|Sales Tax||4% §40-23-2; but may be as high as 12% when local taxes are added (prescription drug purchases are exempt)
|Cigarette Tax||43¢ per pack of 20 cigarettes §40-25-2|
|Gasoline Tax per Gallon||16¢ per gallon §§40-17-31, 220 (34.4¢ per gallon when federal taxes are included)
|Use Tax||4% §§40-23-61, 63|
|Liquor Tax||Liquor monopoly state; Beer $1.05 per gallon (§§28-3-184, 190); Wine $1.70 per gallon ($0.26/gallon for local wine, $9.16/gallon for wine over 14% ABV); Liquor/Spirits $18.23 per gallon|
|Gambling Tax||Gambling winnings are subject to personal income tax
Note: State laws are always subject to change, particularly those that affect tax rates, through new legislation or other means. Make sure you contact an Alabama tax attorney or conduct your own legal research to verify the state law(s) you are researching.
How are My Consumer Tax Dollars Spent?
State taxes, including those levied on personal income and various consumer goods, are the lifeblood of state services. Tax revenue often goes into the state's general fund, but sometimes a certain type of tax may be earmarked for a specific purpose. For instance, gasoline taxes typically go toward highway infrastructure projects.
Research the Law
- Alabama Law
- Official State Codes - Links to the official online statutes (laws) in all 50 states and DC.
Alabama Consumer Tax Laws: Related Resources