MONTGOMERY, Ala. – Earlier this week, Gov. Kay Ivey unveiled a significant tax reform initiative aimed at providing much-needed relief to small businesses across the state.
Starting from Sunday, Oct. 1, more than 3,000 Alabama small businesses will be exempt from the requirement to pay monthly estimated sales taxes to the state Department of Revenue.
Gov. Ivey emphasized the crucial role small businesses play, stating, “Alabama’s economy is anchored in the stability and prosperity of many thousands of hard-working small businesses.”
Ivey highlighted that this move aligns with her 2023 State of the State Address, where she called upon the Legislature to ease the financial burden on small businesses, facilitating their success amidst a challenging national economy.
In response to Gov. Ivey’s call, the Legislature swiftly passed legislation, signed into law on June 9. This law eliminates the monthly estimated sales tax obligation for businesses with average monthly sales tax liability of less than $20,000.
Gov. Ivey expressed her satisfaction with this tax reform, which is expected to benefit over 3,000 small businesses. She explained that by allowing businesses with monthly sales under $500,000 to pay sales taxes after the point of sale rather than estimated monthly payments, they will gain greater cash flow and operational flexibility.
Starting Oct. 1, affected small businesses will pay sales taxes based on the previous month’s receipts in monthly installments due by the 20th of each month. The Alabama Department of Revenue will review 2022’s monthly sales tax returns to identify businesses affected by the new threshold, notifying them by letter.
For more information, businesses can reach out to the Alabama Department of Revenue’s Sales Tax Administration section.
