Alabama Sales Tax 2025
Alabama Sales Tax Guide for SaaS and E-Commerce Businesses
2025-08-29
Alabama Sales Tax Guide for SaaS and E-Commerce Businesses
Alabama imposes a 4% statewide sales tax. Local city and county rates can push the total as high as 11% in some locations.
This guide explains Alabama's nexus rules, what's taxable, how to register, and how to simplify compliance with the state's Simplified Sellers Use Tax (SSUT) program.
- The SSUT lets eligible remote sellers (often SaaS companies and e-commerce sellers) collect a flat 8% statewide rate on all Alabama sales.
Last updated: August 2025
Quick Reference: Alabama Sales Tax (2025)
| Topic | Details |
|---|---|
| State base rate | 4% |
| Local rates | Up to 7% (varies by city/county) |
| Typical combined rate | 5%–11% |
| Economic nexus threshold | $250,000 in annual sales into Alabama |
| SaaS / Digital products | Generally taxable (2019 AL Supreme Court ruling: software = tangible property) |
| Remote seller option | Flat 8% SSUT instead of local rates |
| Registration portal | My Alabama Taxes |
| Tax agency | Alabama Dept. of Revenue |
Who Must Collect Alabama Sales Tax?
You must collect Alabama sales tax if you meet any physical nexus, economic nexus, or marketplace faciltator rules:
- Physical nexus: An office, warehouse, employees, or inventory in Alabama.
- Economic nexus: More than $250,000 in annual sales into Alabama.
- Marketplace facilitator rules: Marketplaces like Amazon, Etsy, or eBay must collect tax on your behalf, but you may still need to register.
Simplified Sellers Use Tax (SSUT) – Flat 8% Rate
The Simplified Sellers Use Tax Remittance Act (Act 2015-448) is a program that allows eligible remote sellers to collect a flat 8% tax on all sales into Alabama.
Who qualifies?
- Out-of-state sellers with no physical presence in Alabama.
- Businesses not otherwise required to collect Alabama sales or use tax.
Why it matters
- One statewide rate: no need to track different local jurisdictions.
- Predictable compliance: always collect 8%.
- Simplified filing: Alabama DOR handles distribution to localities.
How to apply
- Register via the SSUT application.
- Once approved, file monthly returns through My Alabama Taxes.
For many SaaS and e-commerce businesses, SSUT is the smartest way to simplify Alabama compliance.
SaaS & Software Taxability in Alabama
In 2019, the Alabama Supreme Court ruled in Ex parte Russell County Community Hospital that all computer software is tangible personal property and therefore taxable.
What this means for SaaS
- SaaS, cloud access software, and digital subscriptions are generally taxable.
Recommendation: If you sell SaaS into Alabama, assume it’s taxable. Use Afternoon.co to track SaaS rules across all 50 states.
Official sources:
What’s Taxable in Alabama?
| Category | Taxable? | Notes |
|---|---|---|
| Tangible goods | Yes | Clothing, electronics, furniture, etc. |
| SaaS & digital products | Yes | Taxed as tangible personal property. |
| Services | Some | Installation, repair, and select services are taxable. |
| Food & groceries | Yes | Alabama taxes groceries (unlike most states). |
| Shipping & delivery | Yes | Taxable when tied to taxable items. |
Local Jurisdictions & Rates
- Alabama’s state rate is 4%.
- Local city/county rates add 1–7%, with combined rates as high as 11%.
For official rate resources:
If you opt into SSUT, you ignore local rates and simply collect 8% statewide.
Filing & Due Dates
- Standard filers: Returns due monthly by the 20th of the following month.
- SSUT filers: Also due monthly by the 20th, filed via My Alabama Taxes.
Check ADOR’s official due date calendar.
Penalties & Interest
- Penalty for late filing or payment: Up to 25% of tax due.
- Interest: Accrues daily on unpaid balances.
- Penalty waivers: May be granted with reasonable cause.
See ADOR’s Sales & Use Tax Rulebook (PDF) for detailed rules.
FAQs: Alabama Sales Tax
Is SaaS taxable in Alabama?
- Yes. Since 2019, all software is treated as tangible property and subject to tax.
What is the Alabama state sales tax rate in 2025?
- The base rate is 4%, with local rates up to 7%, for combined rates as high as 11%.
What is the SSUT and how does it work?
- The Simplified Sellers Use Tax lets remote sellers collect a flat 8% statewide rate instead of tracking local rates.
What is Alabama’s economic nexus threshold?
- Remote sellers must register if they exceed $250,000 in annual sales into Alabama.
When are Alabama sales tax returns due?
- Monthly, by the 20th of the following month
Official Alabama Resources
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