Alabama shoppers could see the state's grocery tax vanish from their receipts in 2027, but that doesn't mean groceries will suddenly get cheaper everywhere. State lawmakers are drafting legislation to wipe out the remaining 2% state sales tax on food, yet city and county grocery taxes would stay firmly in place in most of the state's 465 municipalities and 67 counties.
GOP Leaders Call Repeal a Day-One Priority
Alabama has already trimmed its state grocery tax twice, cutting it from 4% to 3% in September 2023 and from 3% to 2% in September 2025, according to alreporter.com. Alabama legislative leaders have now announced a plan to eliminate that last 2% entirely, and the outlet reports that fully killing the state grocery tax will be a “day-one priority” of the 2027 Legislative Session. House Speaker Nathaniel Ledbetter said lawmakers have already drafted the legislation and will file it immediately once the session begins.
As AL.com reports, eliminating the remaining state grocery tax would cost the state more than $240 million annually, according to legislative fiscal estimates — a figure not far off from the roughly $270 million estimate reported separately by Alabama Reflector. Alabama Arise, the advocacy group pushing for the repeal, hopes lawmakers finish the job in 2027. Spokesman Chris Sanders has framed the fight in blunt moral terms, previously telling reporters that ending the grocery tax “is a human issue, a moral issue, everybody has to eat to survive.” Justin Bogie has said reducing the state's 2% grocery tax would benefit Alabama families.
Why the Checkout Price Might Not Change
Here's the catch: local governments run their own, entirely separate grocery tax systems, and the state can't touch them. Alabama is a Dillon's Rule state, meaning cities and counties only have the authority the state legislature explicitly grants them, which sharply limits local home rule. State Rep. Danny Garrett has said Alabama's cities and counties cannot restore state grocery tax cuts by simply adding that tax back onto their own books, and per AL.com's reporting, local governments are barred from raising grocery taxes to replace revenue lost from state-level cuts.
That leaves mayors in a bind, because Garrett has also said Alabama local governments are heavily dependent on sales taxes and that cities and counties cannot raise property taxes under state law to make up the difference. A statewide poll found that 66.2% of respondents named groceries and food as a top household cost pressure, well ahead of the 39.4% who pointed to gas prices — underscoring why the politics of grocery taxes keep rising to the top of the Statehouse agenda even as the fix stays incomplete for shoppers.
Foley and Fairhope Say Cuts Would Hurt
In Foley, the math is already tight. The city's combined sales tax rate runs 10% — 4% state, 3% county and 3% city — though Foley's food purchases carry a lower combined rate than other taxable goods because of the 2% state grocery tax layered in. Mayor Ralph Hellmich has said cutting Foley's grocery sales tax would devastate the city's ability to provide services amid rapid growth, and he's estimated that property taxes would need to be tripled to replace the lost revenue. Foley has no authority to assess income taxes, leaving sales tax as one of its few levers.
Fairhope faces a similar squeeze. The city's overall sales tax rate sits at 9%, split among the state, Baldwin County and the city itself. Mayor Sherry Sullivan has said Fairhope would lose nearly $3 million in revenue if its grocery tax were cut, forcing reductions in public projects like road paving and parks. That hasn't stopped City Council member Joshua Gammon, who campaigned on eliminating Fairhope's grocery tax and has advocated cutting it by one percentage point at a time.
Clay's Experiment Offers a Cautionary Tale
Clay, a city with a population slightly greater than 10,000, already tried what a full local cut looks like. The city council passed an amendment reducing its municipal grocery tax from 4% to 2% in August 2022, with the reduction taking effect November 1, 2022, as WBRC reported at the time. Garrett has said Clay actually lacked the authority for that original 2022 cut, and that later state legislation effectively legalized local reductions after the fact. Greg Cochran, executive director of the Alabama League of Municipalities, said he knows of no other municipality that has reduced its grocery sales tax rate, and the League is now surveying its members to update information on grocery tax revenue because Cochran suspects it makes up a significant share of municipal sales tax income.
Clay's overall sales tax rate is 10%, made up of 4% state, 4% city and 2% county tax, and after both the state and city grocery rates fell to 2% each, Clay shoppers ended up paying a 6% sales tax on groceries. Clay's new mayor has criticized the cut as a political stunt.
Bigger Reform May Be Needed
Some observers argue the whole structure needs an overhaul before grocery taxes can truly disappear. Susan Hamill has said meaningfully eliminating Alabama's grocery sales taxes is impossible without comprehensive tax and constitutional reform. Part of the problem is geographic: timber-heavy rural communities have a relatively small property-tax base that limits how much additional revenue higher rates could generate, since Alabama values qualifying timberland according to forestry use rather than potentially higher market value.
There are hints of a broader fix on the horizon. Both Tommy Tuberville and Doug Jones have hinted at support for granting local governments more home-rule authority, which could eventually let cities and counties make their own calls on grocery taxes without running into Dillon's Rule constraints. For now, though, AL.com's reporting suggests Alabama's grocery tax cuts are likely to leave local levies in place absent that kind of major reform.
Alabama isn't alone in grappling with this. The state is one of eight that still impose some levy on food, according to Alabama Reflector, and in 2025 the food sales tax generated $393.5 million for the Education Trust Fund — money state lawmakers will need to account for even as they move to zero out the remaining 2%. Other states have moved faster: Oklahoma eliminated its grocery tax in 2024, Kansas followed in 2025, and Arkansas and Illinois both did so in 2026, according to The Hill. For Alabama shoppers, though, even a successful 2027 repeal at the Statehouse may not mean much at the register if their city or county keeps collecting its own share.
