As the Alabama legislative session comes to an end, Governor Ivey is busy signing new laws. One of the most recent laws provides a two-month suspension of the Alabama tax on groceries.

Alabama has been reducing its state-level sales tax on food from 4% to 2% over several years. Now the temporary suspension of the remaining 2% state tax from May 1, 2026, through June 30, 2026 will push more attention on the subject of family food taxes. Local city and county taxes on groceries are not affected by this state law change.

The Law (HB527) also a $1,000 overtime tax deduction. “Alabamians are the best workers out there. I applaud Rep. James Lomax and Sen. Arthur Orr for working with us to provide tax relief to those employees putting in overtime,” Ivey said. “I am also glad we are able to put a two month pause on the state’s portion of the grocery tax to help families across Alabama. Any time we can responsibly provide some relief for the hardworking people in our state, I am all for it.”

Items such as diapers, formula, and menstrual products are currently exempt from the 4% state sales tax under a temporary law set to expire in late 2028.

The income tax reduction for overtime compensation will apply for tax years 2026 through 2028. The grocery tax suspension will start May 1 and end June 30.