The Ultimate Alabama Sales Tax Guide

Staying compliant with state sales tax rules is essential if you operate or do business in Alabama.

This guide will walk you through everything from when to collect sales tax and how to determine tax nexus, and how to calculate what you owe.

To make your life easier, we’ll introduce a tool that streamlines sales tax compliance so you can focus on growing your business.

Alabama Sales Tax Rate Range 2025

The Alabama state sales tax rate is 4%. If approved by county voters, additional local sales taxes of up to 7.5% can also be implemented. 

How to Calculate Sales Tax in Alabama

You need to be aware of these rates to calculate sales tax correctly in Alabama: 

• State sales tax
• County sales tax
• City sales tax
• Any applicable district taxes

For example, there are three sales taxes in Grove Hill, Alabama:

• Alabama sales tax rate of 4%
• Clarke County sales tax of 1%
• Grove Hill City sales tax of 5%

This brings the total sales tax rate in Grove Hill to 10%.

Collecting Alabama Sales Tax from Customers

Check out the guide below for a general overview of Alabama sales tax. But it’s wise to consult a sales tax expert for more specific guidance.

Do I Have to Collect Alabama Sales Tax from Customers?

Any retailer selling, leasing, or renting tangible personal property in Alabama should collect sales tax unless the state specifies otherwise.

What Creates Sales Tax Nexus in Alabama?

Some conditions that create nexus in Alabama include:

• Physical nexus: Businesses with a physical address, like an office or warehouse, in the state.   
• Delivery: If companies deliver goods using their own vehicle or leased equipment, the transportation charges are subject to sales or use tax.
• Economic nexus: Businesses whose gross revenue exceeds $250,000 in the previous or current calendar year.

Learn more about sales tax nexus and when you’re required to collect sales tax.

Do I Have to Collect Sales Tax from Alabama Customers if I Sell on Amazon, Walmart, eBay, or Etsy?

Yes. 

The state has a special sales tax rate for online sellers, known as the Simplified Sellers Use Tax, which is 8%. This tax no longer applies once the seller has a retail presence in the state. 

Taxable Products in Alabama

In Alabama, sales tax applies to most tangible personal property and services, though certain items, such as groceries, are taxed at a reduced rate.

Here's a comprehensive breakdown of taxable items in Alabama:

Are Groceries Taxable in Alabama? 

Yes, the state imposes a 3% sales tax on grocery items. 

Are digital products taxable in Alabama? 

Yes, digital products are taxable in the state. 

Is Software-as-a-Service (SaaS) Taxable in Alabama?

Unless otherwise specified, licensing computer software is treated as a retail sale, regardless of its purpose or how it’s delivered to the buyer or licensee.

Tax-Exempt Items

Some items that are exempt from sales tax in Alabama are:

• Raw, unprocessed agricultural products, like fruits, pecan nuts, and shelled peanuts.
• Seeds and fertilizers for planting purposes
• Sales of feed for livestock and poultry
• Prescription drugs
• Gasoline and motor oil

How to Register for an Alabama Retail License

You can register for a retail license online through Alabama’s tax portal, My Alabama Taxes. 

Learn how to register for a seller's permit in every US state.

Do I Need an Alabama Sales Tax License if I’m Only a Wholesaler? 

Yes. Wholesalers can obtain a resale certificate, ST: EX-A1, to purchase items for resale without paying Alabama sales tax.

How to Collect Sales Tax in Alabama

Alabama uses a destination-based sales tax system.  

This means sales tax is calculated based on the tax rate at the delivery address where the item is shipped to the customer.

Should You Collect Sales Tax on Shipping Charges in Alabama?

If a seller delivers goods using their own vehicle or leased equipment, the transportation charges are subject to sales or use tax. 

However, if delivery is made through a common carrier or the U.S. Postal Service, those charges are exempt from sales or use tax as long as they are billed separately and paid by the buyer. To qualify for exemption, the transportation charges must be clearly itemized and distinct from other charges.

Learn more about sales tax on shipping in every state in the United States.

How to File and Pay Sales Tax in Alabama

There are multiple ways to file and pay sales tax in Alabama:

• Automated: Let Zamp handle your Alabama sales tax filing and remittance so you won’t have to deal with sales tax returns ever again.
• Online: Taxpayers should file and pay electronically via the My Alabama Taxes.

Explore how you can file and pay sales tax in other US states.

FAQs on Paying and Filing Alabama Sales Tax

What Is Use Tax?

Alabama’s consumer use tax applies when you bring tangible personal property into the state for storage, use, or consumption, and the seller didn’t collect sales tax at the time of purchase.

I Didn’t Collect Any Alabama Sales Tax During This Period. Do I Still Need to File a Return?

Yes. 

Even if you didn’t collect any sales tax, filing a “zero” return is a must to ensure sales tax compliance.

What Is the Penalty for Filing and/or Paying Alabama Sales Tax Late?

Returns filed after the deadline are subject to a “failure to timely file” penalty of 10% of the tax owed or $50 — whichever is higher.

How Often Do I Need to File and Pay Sales Tax in Alabama?

You should file and pay sales tax on the 20th of each month following your sales tax period.

Alabama Sales Tax Due Dates

Alabama due dates for monthly filers:

Alabama quarterly sales tax filing due dates:

The Alabama annual filing due date is:

Let The Experts Handle Your Alabama Sales Tax Filing

Say goodbye to sales tax headaches with Zamp.

From seamless onboarding and accurate tax calculations to hassle-free one-click registration and filing, Zamp makes sales tax management a breeze—no matter how big or small your business is.

Simplify your sales tax process and focus on what matters most. Get started with Zamp today!