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Alabama Needs More Money


 Cigarette and tobacco taxes could soon increase in Alabama.

Alabama has a revenue shortfall of some $700 million and its debts are mounting. To beef up the state’s general fund, Governor Robert Bentley is a proposing a Revenue Plain with eight options. Although he will not officially unveil his plan to the legislature until March 4, the governor has released a teaser.

Transaction tax changes

  • Increase sales tax for automobiles to 4%
  • Increase rental tax for automobiles to 4%
  • Increase cigarette tax to $1.25 per pack, and the tax on other tobacco products proportionately
  • Remove the credit that financial institutions receive for sales taxes paid

Other tax changes

  • Eliminate income tax withholding exemption certificates
  • Eliminate municipal utilities’ exemption
  • Remove credits for state privilege and ad valorem taxes paid by insurance companies
  • Remove credits for office facilities and real property investment made by insurance companies
  • Require combined corporate income tax reporting for corporations doing business in other states

Governor Bentley knows this is a bold plan and he stands behind it, saying, “We were elected to make bold decisions that help Alabama, and I believe we will do just that.”

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.