Every year, nearly 8 million beachgoers flock to Gulf Shores and Orange Beach, many of whom drive through Foley along the way.

As they make their way to condos and rental homes, many stop to stock up on groceries in Foley’s bustling commercial district along Alabama State Route 59. Every shopping trip in Foley, a main stop as visitors head to the beaches, comes with a 9% sales tax on groceries with 3% of that revenue staying in the city to fund crucial infrastructure improvements like better roads and drainage systems. The remainder of the sales tax on groceries goes to the state and county which each also take a one-third share of that 9%.

In fact, more than 60% of Foley’s budget is dependent on the sales taxes generated in the city’s commercial hub. Without this essential revenue, the city wouldn’t be able to maintain its basic infrastructure.

“It would be devastating to our city,” Mayor Ralph Hellmich said.

Foley’s situation highlights a growing concern across Alabama, as state lawmakers push to eliminate another percentage point of the state’s 3% sales tax on groceries (the 4% tax remains on non-grocery items). The first reduction happened in 2023, lowering the state’s groceries sales tax from 4% to 3%.

Meanwhile, there are groups that are urging cities to cut their sales taxes on groceries as well.

The phrase “Cut the grocery tax” has become a rallying cry, uniting unlikely allies such as the conservative Alabama Policy Institute and the progressive Alabama Arise in their advocacy for the tax’s removal. But as lawmakers edge closer to cutting more, one key question remains: Can the state ever truly eliminate the grocery sales tax?

Long shot

While eliminating the grocery sales tax is possible, it’s a long shot, and only if comprehensive tax reform is pursued. As experts like Susan Hamill, professor at the University of Alabama School of Law, point out, the road ahead is rocky.

For starters, it would require amending the Alabama Constitution to allow local governments to raise property and income taxes to make up for the loss in sales tax revenue. That is politically unlikely in a conservative state, where property tax referendums often meet voter rejection, and where income tax cuts are often pursued.

Additionally, changes to the Constitution would be needed, requiring voter support, to modify how property is taxed. Experts say that would especially include timberland, which makes up 70% of Alabama’s land yet contributes very little in property taxes.

“Even if the latest 1% cut in the state sales tax on groceries happens, the sales tax will still be alive and well due to additional taxes from counties, municipalities, school districts, and other special projects,” Hamill said.

Tax reformers and critics have long accused Alabama’s tax system as regressive, affecting lower income people the most because of the heavy reliance on sales taxes. Conversely, Alabama has the lowest property taxes per capita.

The state’s tax competitiveness is also harmed by the high sales tax. According to a 2025 report by the Tax Foundation, a non-partisan think tank in Washington, D.C., Alabama’s overall tax competitiveness rank is No. 38, placing it behind all its neighboring states in the South.

The biggest culprit behind the low ranking is sales taxes, where Alabama is ranked as second worst in the U.S. behind only Washington state.

The crux of the issue, Hamill explained, lies in Alabama’s property assessment system on forestlands, which is based on current use rather than market value.

“Alabama cannot meaningfully eliminate the sales tax on food until it accomplishes genuine tax reform and genuine tax reform is impossible without genuine constitution reform,” Hamill said. “Absent that, any tax cuts will just be cosmetic Band-Aids.”

Flexibility

Alabama Republican lawmakers believe they have a plan that might encourage some cities and counties to consider a local cut to the sales taxes on groceries.

It’s in the form of HB387, one of a four-bill package of tax cuts the Alabama House approved on March 18. The package awaits consideration in the Alabama Senate.

Alabama is one of only 10 states still taxing groceries. Kansas, Oklahoma, and Virginia have all eliminated their state sales taxes on groceries, but city and county sales taxes still apply, according to an analysis by AARP.

HB387 allows local governments in Alabama to reduce local sales taxes on groceries without forcing their cities to reach a revenue growth threshold. Alabama law currently allows a city to reduce their sales tax on groceries by 25% as long as their general fund revenues exceed 2% over the prior year.

HB387 is companion legislation to HB386, which reduces the state’s sales tax on groceries from 3% to 2%, starting on Sept. 1. The legislation also removes a requirement for the state cut to take place only if revenues in the Education Trust Fund (ETF) grow by 3-1/2%. The ETF is one of the state’s main budgets that pays for most of the public education in Alabama.

Republican Lt. Gov. Will Ainsworth, who oversees Senate floor proceedings, is pushing for the cut without requiring revenue thresholds to be met due to the ongoing concerns about inflation affecting grocery store prices.

“Lt. Gov. Ainsworth started the recent movement to remove the state sales tax on groceries and pushed the bill to passage, so he fully supports any efforts that speeds up the process and abolishes the tax permanently,” said Catherine Fuller, the deputy chief of staff for Ainsworth.

Local skepticism

A total removal of the sales tax on groceries will need considerable buy-in from Alabama’s 461 incorporated municipalities, and 67 counties.

Hoover is the only city to publicly consider a local grocery tax cut since the state legislature approved the first state cut in 2023. In Hoover, groceries are taxed at 8.5% — 3% by the state, 3.5% by the city, 1% by Jefferson and a 1% special district tax to support transportation, local attractions, etc.

The Hoover City Council unanimously voted in 2023 to lower the city’s sales tax on groceries by half a percentage point, from 3.5% to 3%. It would have taken effect on Tuesday, Oct. 1, 2024.

But the tax cut was rescinded after city officials learned that state law required a 25% reduction – all or nothing. Under a 25% cut, the city’s tax rate would have dropped further to 2.65%.

“The Hoover City Council voted to begin removing its local grocery tax but found that current law prevents them from doing it, which prompted (HB387),” Fuller said. “Once they are given the ability, we are confident that the city and county governments will follow Hoover’s lead and trim their grocery taxes whenever their finances allows.”

Ken Grimes, city administrator for Hoover, said “at the present time there has not been discussion of the grocery tax.”

Hoover was also concerned that it had not raised the 2% revenue requirement to cut the tax, according to state Rep. Danny Garrett, R-Trussville, who was the House sponsor of the tax-cut package.

“We’re going to let the locals make their own decisions,” Garrett said.

Only one city in Alabama has, in the recent past, cut its sales tax on groceries. That decision came in 2022, in the Jefferson County city of Clay, population of 10,100 residents.

Technically, Clay implemented the cut before the city had the legal authority to do so. But Garrett said there was no challenge to what Clay was doing, and the tax cut remains in place. Garrett also said the sales tax cut the council approved did not affect school funding.

“Cities are heavily dependent on that sales tax revenue,” Garrett said. “In some cities, it’s more of an issue than others. In some cases, they might have money earmarked for education and stuff like that. It’s going to be a city-by-city (consideration).”

Reform

Garrett said it’s Ainsworth’s wishes to cut the sales tax on groceries completely. He said he would not be surprised to see state lawmakers continue to make further cuts, until the final 2 percentage points are eliminated. Under HB387, $121.6 million would be cut from the EFT.

Without constitutional tax reform, it will be difficult for city and county governments to reduce their reliance on sales taxes, including the grocery tax, due to their dependence on this revenue source.

As Hellmich, Foley’s mayor, points out, municipal governments do not have an income tax available to recover the funds from a sales cut, like what state government can do.

None of 10 largest cities in Alabama, which called themselves the “Big 10,” have taken a position on the matter.

“Alabama’s Constitution and laws are what creates the revenue framework for municipalities,” said Tuscaloosa Mayor Walt Maddox. “Within this framework, sales taxes are one of the few significant revenue sources available to cities and towns across the state. As a result, municipal budgets are dependent on sales tax revenue because there is no other option.”

Sen. Vivian Figures, D-Mobile, said to make any meaningful change will require an increase in property taxes – thus, revisiting tax reform that faces uphill battles.

“We are the state at the top of the list with the lowest property taxes in the country,” she said. “We need to look at other areas where people can afford to pay more. On your property taxes, you can write them off on your federal income taxes and it ends up being a wash.”

She added, “We need to help people who need the help, particularly now with food prices as high as they are. I am for no sales tax on food, period. But we need to find that tax elsewhere where we give tax incentives out those who can afford to pay.”

Current focus

Still, Alabama Republicans and reformers are glad to see the Senate moving ahead with the second sales tax cut on groceries even if it’s unfeasible for the locals to follow suit.

“My concern was always bringing Alabama in line with the overwhelming majority of states in the U.S., and particularly our surrounding areas,” said Sen. Andrew Jones, R-Centre, who sponsored the initial 2023 sales tax cut on groceries.

There is no timetable for the tax cuts to be considered by the Alabama Senate.

“The most important thing to me is the state does its part and give relief where we can and, at least allow the option for relief on the local level,” Jones said.

Quin Hillyer, a conservative columnist based and a member of Mobile’s official tax-reform advisory commission in 2015, said he is supportive of the efforts in Montgomery to cut the sales tax on groceries “as far as the state can possibly afford.”

But he also recognizes that municipalities are “almost certainly” not going to follow suit.

“Sales taxes on groceries in particular are among the most regressive taxes imaginable,” Hillyer said. “Long-term, though, the state should re-balance its whole tax structure, which is a bigger topic for another day.”