Minimum Sales Rate Tax for 2024
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| 1% | Column content | Column content | Column content | Column content | |
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| Minimum combined sales tax rate value | 10% | Column content | Column content | Column content | Column content |
| Special tax | 1% | Column content | Column content | Column content | Column content |
| Economic sales nexus threshold | $250,000 | Column content | Column content | Column content | Column content |
| Transactions threshold | N/A | Column content | Column content | Column content | Column content |
| Sales tax return filing due date | 20th day of the month following the reporting period. | Column content | Column content | Column content | Column content |
The base state sales tax rate in Alabama is 4%, but since the city-specific tax rate is 4%, the Madison County tax rate is 1% and the Jefferson Co Sd tax is 1%, the minimum sales tax rate for Birmingham is 10%.
How to calculate your sales tax rate
Use our online sales tax calculator to determine the combined state and local sales tax rate for each location where you have a physical or economic nexus. Just enter your state and ZIP code to get your sales tax rate.
Looking for help calculating your sales tax? Contact us today to book a free consultation!
What is nexus?
In Birmingham, businesses must understand “nexus” to determine their tax obligations. Nexus refers to the connection that requires a business to collect sales tax in a state. This concept became even more important after the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc., which allowed states to require sales tax collection based on economic activity rather than just a physical presence.
Specific sales tax rules for Birmingham
Birmingham applies a 6.5% lodging tax on top of the state’s 4% rate, making the total lodging tax 10.5%. Property taxes in Birmingham are assessed at about $7.26 per $1,000 of assessed value, in addition to Jefferson County’s rates. A rental tax of 1.5% applies to automobile leases, and other tangible personal property rentals are taxed at 4%.
Specific industries face additional local taxes, such as excise taxes on alcohol and tobacco. Additionally, Birmingham has an occupational tax of 1% on gross wages for employees working within the city limits. Staying informed about these tax regulations is crucial for compliance and financial planning.
Services
Typically not taxable unless they are directly related to the sale of tangible personal property.
Goods
Most tangible items, including appliances, cars, furniture, sporting goods, and electronics, are subject to sales tax.
Clothing
Generally taxable, except during designated sales tax holidays.
Electronics
Taxable.
SaaS
Taxable.
Digital Products
Sales of digital items like photographs and blueprints are subject to sales tax.
Software
Taxable if downloaded; however, pre-installed software on a device is not taxable.
Freight/Shipping
The cost of shipping is not taxable.
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