Minimum Sales Rate Tax for 2024
| 4% | Column content | Column content | Column content | Column content | |
| 3.5% | Column content | Column content | Column content | Column content | |
| 2.5% | Column content | Column content | Column content | Column content | |
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| Scientific & Cultural Fac.(cd) | Column content | Column content | Column content | Column content | |
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| Minimum combined sales tax rate value | 10.00% | Column content | Column content | Column content | Column content |
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| 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 3.5% and the Montgomery County tax rate is 2.5%, the minimum sales tax rate for Montgomery 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 Montgomery, 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 Montgomery
Montgomery enforces a rental tax of 4% for most leased personal property and 2% for automotive rentals. The city also levies an excise tax on alcohol and tobacco sales, and property taxes in Montgomery are relatively low compared to national averages, funding local schools and infrastructure.
Additionally, Montgomery applies 1% occupational tax rates for individuals working within the city limits, which employers are responsible for withholding.
Services
Generally not taxable unless directly related to the sale of tangible personal property.
Goods
In general most goods such as appliances, cars, furniture, sporting goods, and electronics, are subject to sales tax.
Clothing
Taxable unless during a sales tax holiday.
Electronics
Taxable.
SaaS
Taxable.
Digital Products
E-books, music downloads, streaming services and similar items are subject to sales tax.
Software
Taxable if it is downloaded but pre-installed software on a device is not taxable.
Freight/Shipping
Cost of shipping itself isn’t taxable
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