MOBILE, AL (WKRG) — Starting at midnight, Alabama shoppers will have to start paying an eight-percent sales tax on Amazon.com.
As we’ve been reporting for months, Alabama’s eight-percent sales tax for purchases at more than 70 online retailers, most notably Amazon, goes into effect starting on November 1.
That means if you want to save a few bucks on this year’s holiday shopping, now might be the time to do it.
Amazon entered into a deal, known officially as the “Simplified Sellers Use Tax,” with Alabama state officials to be compliant with the state’s tax codes earlier this year. The deal, which became nicknamed the “Amazon tax,” will give Alabama tens of millions of dollars in tax revenue, while Amazon gets to expand their operations into the state.
Amazon is yet to announce plans to expand into Alabama, but it is considered an inevitability. They have declared their intentions to open retail locations and more delivery facilities throughout the U.S.
The Alabama Department of Revenue tells News 5 the arrangement, which officials describe as “long overdue,” goes into effect on November 1 specifically to capitalize on the holiday shopping season.
Alabama Revenue Commissioner Julie Magee says they expect $30 to $50 million in revenue from the new tax in just the first year alone. Magee says she expects that number to rise dramatically in future fiscal years.
All that tax revenue will be split up as follows:
- 50% to the state of Alabama (majority to the General Fund, with a portion going to the Special Education Trust Fund)
- 25% to all Alabama counties (allocated proportionately based on county population)
- 25% to all Alabama cities (allocated proportionately based on city population)
Magee tells News 5 that in the first year, the City of Mobile should see approximately $72,231 and Mobile County should receive $92,407.
Alabama will be the 29th state in the country to begin receiving sales tax from Amazon.
74 other online retailers were grouped in to the Simplified Sellers Use Tax in Alabama, but the list of participating companies were not disclosed.