Alabama shoppers who held off until the weekend to stock up on their Labor Day cookout supplies may notice a slight discount after the state’s 1% grocery tax cut took effect on Friday, Sept. 1.

The cut, approved by state legislators in May, is set to be the first round of a 2% total reduction in Alabama’s previous 4% grocery tax. Locally implemented sales taxes will remain unchanged under the law. The second cut is scheduled for Sept. 1, 2024, if the state’s Education Trust Fund is able to show a 3.5% growth in revenue receipts during the previous fiscal year. If growth projections are not met, the second cut will be delayed until revenues are able to meet this requirement.

Statewide grocery taxes currently contribute about $600 million annually to the ETF budget.

The member-led organization Alabama Arise estimates the recent 1% reduction will save the average Alabama family roughly $150 each year on their grocery bills. Chris Sanders, the group’s communications director, describes the cut as a win for struggling Alabama families. It’s been a cause they have been advocating for several years.

“We’re thrilled that this grocery tax cut is law now and that this is happening. It’s something we’ve been hearing from communities across the state for years now. This is something folks living paycheck to paycheck really need to help keep food on the table,” he said.

However, Sanders said there is still work to be done, and that the group will continue pushing for the complete elimination of the state’s grocery tax.

“It remains a big priority for us to finish the work we started in removing the grocery tax. This bill gets us halfway there,” he said.

Alabama is one of only three states — Mississippi and South Dakota being the other two — to place a full tax, without credits, on grocery sales.

State Rep. Danny Garrett (R-Trussville/Clay/Pinson) said he wouldn’t rule out an eventual elimination of the tax, but noted how doing so would require a closer examination of the state’s tax structure in order to make up the lost education funds.

“Long-term, we may eventually do that [eliminate sales tax on groceries], but when you talk about that, you really need to understand the big picture of Alabama’s tax situation,” Garrett said.

Garrett pointed out that while Alabama may place taxes on certain items — such as groceries — that other states do not. The majority of those taxes are locally implemented. He added that Alabama has significantly lower tax rates on goods and services than other states. Garrett said the state’s property tax rates are the lowest in the country and when factoring in no sales taxes being placed on things such as haircuts or lawyer fees, the state has the second lowest sales tax.

“Every state gets their money from somewhere, and when you add it all up, we’re the lowest taxed state in the country. So, it may be that one day we can eliminate that grocery tax entirely, but if we do we’ll have to figure out where to make that up in the budget,” he said.

Garrett also sponsored a bill designed to “partially offset the amount of sales taxes paid on groceries throughout the tax year” by rolling out one-time tax rebates in November based on an individual’s tax filing status on Jan. 1, 2021.

Single individuals are set to receive a $150 payment, while joint filing couples will receive $300. The payments will be non-taxable and will pull an estimated $393 million from the $2.8 billion ETF surplus account.

Garrett said, because the surplus previously accounted for the payments, it will not effect the ETF’s growth requirement in order to implement next year’s grocery tax cut.

In addition to the rebate checks, the bill also utilizes the ETF surplus to provide funding a number of education projects including a $15.85 million payment to Wallace State Community College, $15 million of which is to be used for the development of the college’s new STEM Gateway Education Facility, while the remaining $850,000 will fund historic outdoor theater renovations in Winston County.

The college will also receive and additional $4 million payment to its Oneonta campus for the development of the Blount County multi-purpose complex.

UPDATE: A second release from Walmart stated that not all stores had addressed the issue, but they expected it to be fixed Friday night.

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The Times received the following statement from Walmart Press Office Director Joe Pennington on Friday Sept. 1 after presstime:

“Earlier today, some Walmart customers and Sam’s Club members across Alabama were incorrectly overcharged sales tax while shopping with us. 

Effective Sept. 1, the sales tax rate on food decreased by one percentage point statewide. Our systems mistakenly charged both the old rate and the new rate at the time of sale. This issue has been fixed, and we could use your help informing some customers who may have been overcharged. 

We’re asking customers who used cash while shopping with us today to check their receipts. If they’ve been charged two separate sales tax amounts, bring that receipt to their Walmart store or Sam’s Club and speak with a member of management to get a refund for the higher of the two taxes. 

Customers who used credit cards and other forms of payment will receive a notification their refund were automatically applied.