This guide provides an overview of Sales Tax in Alabama, including applicable rates, registration requirements, compliance obligations, and filing deadlines. It is designed for businesses engaging in transactions within Alabama.
Local tax jurisdictions administer their own sales taxes, making it one of the most complex systems in the U.S.
The following conditions might establish a physical nexus in Alabama:
In Alabama, just like in most states, sales tax generally applies to the sale of tangible personal property. However, certain services are also subject to sales tax.
To calculate sales tax, simply multiply the sales amount by the combined state and local rate.
Register the entity on ALDOR (Alabama Department of Revenue/ My Alabama Taxes)
Register for a sales tax permit through the My Alabama Taxes (MAT) portal, then charge the correct state and local tax rate based on the customer’s location. Show the tax on the invoice, collect it at the point of sale, and remit it through MAT according to your filing schedule.
When multiple locations share the same legal owner, the state will issue a single sales tax registration number. All sales from those locations must be consolidated and filed on one return.
The same rule applies to locations situated in municipalities or counties where the state handles local tax administration, only one local tax ID will be issued. However, if a location is in a municipality or county that manages its own local taxes, you must register directly with that local authority or its tax administrator to obtain a separate local tax account number.
Alabama does not issue resale certificates to remote sellers with no in-state presence. In drop-shipping situations, the state treats the sale to the reseller and the sale to the Alabama customer as separate transactions. The vendor or drop-shipper may accept the reseller’s home-state resale certificate for the resale purchase. If the resale to the Alabama customer is taxable, the remote reseller must collect and remit Alabama tax.
Yes. Retail sales of tangible goods shipped into Alabama from out of state are subject to Alabama use tax, no matter how the order is placed. If the out-of-state seller has nexus in Alabama—such as a physical presence, inventory, salespeople, or remote-entity nexus—they must register with the ADOR and collect and remit the correct tax. If the seller does not have nexus, the buyer is responsible for calculating and paying use tax through My Alabama Taxes (MAT). Some non-nexus sellers choose to voluntarily register to collect Simplified Sellers Use Tax as a convenience for their customers.
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This guide provides an overview of Sales Tax in Alabama, including applicable rates, registration requirements, compliance obligations, and filing deadlines. It is designed for businesses engaging in transactions within Alabama.
Local tax jurisdictions administer their own sales taxes, making it one of the most complex systems in the U.S.
To calculate sales tax, simply multiply the sales amount by the combined state and local rate.
Register the entity on ALDOR (Alabama Department of Revenue/ My Alabama Taxes)
Register for a sales tax permit through the My Alabama Taxes (MAT) portal, then charge the correct state and local tax rate based on the customer’s location. Show the tax on the invoice, collect it at the point of sale, and remit it through MAT according to your filing schedule.
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How to Deregister for VAT and What to Consider First A drop in turnover, a change of business model, or the closure of a cross-border sales channel can all result in a company being registered for a tax it no longer needs to charge. Cancelling that registration is rarely as simple as writing to the […]
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