Getting your Trinity Audio player ready...

Alabama residents received some relief at the check-out line Friday when the first reduction of taxes on groceries went into effect.

Governor Kay Ivey signed a bill in July that will ultimately reduce the state sales tax on grocery items from 4 percent to 2 percent. The first phase of that cut — a reduction of 1 percent — became official Friday, Sept. 1, putting the tax on groceries at 3 percent currently.

The second phase of the cut is scheduled for Sept. 1, 2024, cutting the grocery tax further by another 1 percent to a total of 2 percent. This second cut is contingent on education revenue projections showing at least a 3.5 percent or more increase for the 2025 fiscal year. If the education revenue projections do not achieve that growth, the cut could have to wait another year.

According to the Alabama Retail Association, cutting grocery taxes in half will result in Alabamians saving more than $318 million. Alabama Arise, a nonprofit that worked to cut the grocery sales tax, estimates that the 1-percent drop in grocery sales tax will save a family of four about $150 annually.

Alabama was one of only three states that taxes groceries at the full rate with South Dakota and Mississippi being the other two. Alabama is also one of 13 states that charges any amount of tax on food.

In Andalusia, taxes for groceries will be reduced to 9 percent for at least the next year, ahead of the state’s second 1 percent cut. The state will charge 3 percent, the city charges 3.5 percent, and the county charges 2.5 percent. A half-percent of sales tax charged by Andalusia is dedicated to education. The county dedicates approximately 65 percent of revenue from its sales tax to schools, which is dispersed among all schools in the county, including the city school systems in Andalusia and Opp.

There were some problems in implementing the new tax structure for at least some Walmart stores across the state Friday morning where it appeared computer systems were charging an additional 9 percent tax, instead of decreasing the tax from 10 to 9 percent. Store officials announced they were working to fix the error and that refunds would be provided to those who were overcharged. Walmart shoppers in Kansas faced the same issue earlier this year when that state reduced its food sales tax.

A statement from Walmart said, “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. The situation is being corrected, and we’re asking potentially impacted customers to take their receipts to their nearby stores or clubs for a refund of the higher sales tax.”

The state’s grocery sales tax cut uses the federal Supplemental Nutrition Assistance Program’s list of applicable foods, which covers most foods sold in grocery stores, including produce, meats, dairy items, snacks and non-alcoholic beverages. Other products, such as alcohol, tobacco, pet food, hygiene items and household cleaners will remain taxed at 4 percent.