1. Prescription medications and medical equipment: In Alabama, prescription medications, prosthetics, and other medical equipment are free from sales tax. This also includes over-the-counter drugs that a doctor has prescribed.
3. Clothes: Alabama does not charge sales tax on clothing products that cost less than $100 each.
5. School materials: In Alabama, purchases of school supplies made for use in a classroom are exempt from sales tax.
Alabama requires internet merchants to charge sales tax on purchases made by residents of the state. Known as the “Amazon tax,” this mandates that online merchants charge Alabama residents a 4% sales tax on their transactions. Not just Amazon is subject to this tax; all online businesses are.
Alabama has a variable sales tax rate and may impose additional local taxes depending on the area. The statewide sales tax rate is 4% as of 2021, however some cities and counties also impose their own levies. In the city of Birmingham, for instance, the combined sales tax rate is 10%, made up of a 4% state tax, a 2% county tax, and a 4% city tax.
Finally, Alabama taxes most purchases of equipment. There are few exceptions, though, for specific machinery used in manufacturing or agriculture. If a business wants to know whether its equipment acquisitions qualify for an exemption, they should speak with the Alabama Department of Revenue.
In conclusion, while Alabama’s sales tax can be confusing, knowing what is exempt can help customers and companies make wise choices. Businesses should consult a tax expert to guarantee compliance with state and local sales tax rules, and the Alabama Department of Revenue website provides comprehensive information on sales tax exemptions and rates.