You are reading 1StopVat’s Alabama sales tax guide. This article will explain the details of the sales tax in Alabama (AL).
Our experts at 1StopVat have updated the article with the current and relevant information on how sales tax works in the Yellowhammer state.
You’ll find a wide variety of information related to sales tax as it relates to consumers and businesses, including who is responsible for paying state sales tax and where you can find information about the taxes.
Whether you’re wondering what is the sales tax rate in Alabama, whether you need to register for Alabama tax sales, or the filing frequency of Alabama state sales tax, our sales tax guide will help. If you have more questions or require specific assistance, don’t hesitate to contact the 1StopVAT team for help.
A sales tax is a tax paid to a tax authority (state or local) on the sale of specified products and services. Alabama enacted a general state sales tax in 1936, and the rate has since climbed to 4%.
In addition to the Alabama sales tax rate, there may be one or more local sales taxes and one or more special district taxes, ranging from 0% to 7%.
The total sales tax rate in Alabama ranges from 4% to 11%, depending on the sale area.
The requirement to collect Alabama sales tax is dependent on having a solid link with the state. This is referred to as nexus and determines whether the state has the legal right to oblige your company to collect, pay, and return sales tax.
Sales tax nexus can be established by remote or out-of-state sellers who have no physical presence in Alabama in the following ways:
Affiliate nexus includes having someone as a solicitor of sales of goods on the retailer’s behalf in Alabama.
Economic nexus is created, and the remote seller must register with the state and collect and pay sales tax in Alabama when the company generates more than $250,000 in sales of taxable or exempt items or services or completes 200 or more distinct sales transactions to Alabama.
Inventory in the State includes products held by Fulfillment by Amazon (FBA) merchants and kept at warehouses in Alabama.
Trade show nexus is established when businesses participate in trade exhibitions and plan to make sales. However, no nexus is established if you only participate in trade exhibitions.
To register for an Alabama seller’s permit online, you must submit specific information regarding your business through the Alabama Department of Revenue(via their website).
The DoR will ask you to provide company and personal details and estimates of your future sales.
There is no cost to register for a seller’s permit in Alabama, but other business registration fees may apply.
If you have trouble with registration or anything involving the sales tax rate Alabama, don’t hesitate to get in touch with the 1StopVat team for assistance.
Before proceeding to figure out how much is the sales tax in Alabama, we must figure out what items and services are taxed or exempted.
State law exempts certain items from sales tax Alabama, such as most non-prepared food products, food stamp purchases, and prescription medicines are examples.
State law also exempts healthcare, manufacturers, and software from the Alabama state sales tax rate.
Tangible personal property includes material items such as machinery and equipment, tools, furniture and fixtures, and other items used in business activity.
Tangible personal property is taxable to businesses for Alabama sales tax rates.
According to the Alabama Department of Revenue, the Alabama state sales tax rate is 4%.
On top of that, there are one or more local sales taxes and one or more special district taxes ranging from 0% to 7%, putting the total Alabama sales tax percentage at 4% to 11%.
If you want a quick way to calculate how much sales tax in Alabama your company should collect, check out our Sales Tax Calculator or contact the 1StopVAT team.
Once you’ve registered with the Alabama DOR and started collecting sales tax rates Alabama, you become responsible for transferring tax revenue from customers to tax authorities.
The Alabama Department of Revenue will assign your company a filing frequency.
You will either be assigned a monthly, quarterly, or yearly frequency. The frequency depends on the quantity or volume of your company’s sales.
For example, more prominent companies must file more frequently.
The filing terms apply to both the sales and use tax Alabama.
We hope we were able to inform you of everything you needed to know about Alabama’s Sales Tax and questions, such as what’s the sales tax in Alabama.
If you have any other inquiries, please do not hesitate to contact the 1StopVAT team.