March 10, 2017
A Senate committee approved a bill Wednesday to phase out the state sales tax on farm equipment.
SB 165, by Sen. Tom Whatley, R-Auburn, would eliminate the tax over a three-year period. Currently, farmers pay 1.5 percent state sales tax on farm equipment in Alabama, while farmers in the nearby states of Florida, Georgia and Tennessee are exempt from such taxes.
“Buying a new piece of farm equipment is often an investment of hundreds of thousands of dollars,” said Federation Governmental and Agricultural Programs Department Director Brian Hardin. “Alabama’s sales tax rate amounts to thousands more our farmers must pay when buying equipment. Removing this state sales tax will help Alabama farmers stay competitive by allowing them to update and replace equipment at the same cost farmers in other states are paying.”
The bill calls for reducing the tax by one-half percent each year, with full exemption taking effect at the beginning of the third year after the measure becomes law.
The Federation favors elimination of the tax. SB 165 now goes to the full Senate.