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Rental Tax

Rental tax is a privilege tax levied on the lessor for the leasing or renting of tangible personal property. The gross receipts, including any rental tax invoiced, from the leasing or rental of tangible personal property are subject to the State rental tax at the following rates:

  • Automotive vehicles:  1.5%
  • Linens/Garments:  2.0%
  • Other:  4.0%

This tax is due on “true leases” (those leases in which the title to the property is retained by the lessor at the end of the lease agreement or when the lessee has an option to purchase the item at the end of the lease agreement for the fair market value of the item). “Conditional sales leases” (those in which the title of the property is transferred to the lessee at the end of the lease agreement or when the lessee has an option to purchase the item at the end of the lease agreement for $1 or a nominal amount with no option to return the leased item without purchasing) are subject to sales tax. When equipment is under the control of and operated by employee of lessor, then the transaction is considered a service rendered and is not subject to rental tax. Rental tax returns and remittances are due monthly on or before the 20th day of the month for the previous month’s rentals. However, pursuant to Section 40-23-7, Code of Alabama 1975, you may request quarterly filing status if you have a tax liability of less than $2,400 for the preceding calendar year.  You may request bi-annual filing if you have a tax liability of less than $1,200 for the preceding calendar year.  You may also request bi-annual filing if you make rentals during no more than two thirty consecutive day periods during the preceding calendar year.  You may request annual filing status if the tax liability for the entire preceding calendar year is less than $600.  You may also request annual filing if you make rentals during no more than one thirty consecutive day period during the preceding calendar year.  Changes to the filing status can only be requested each year before February 20th in order to file quarterly, bi-annually or annually for that calendar year.  No discounts apply for timely filing. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. Learn more 

Related FAQs in Taxes Administered

Hospital Assessment Fee is an assessment imposed on each privately-operated hospital in the State of Alabama. Privately operated hospitals in the state of Alabama that are funded through the Alabama Medicaid program are taxed according to their net patient revenue. The assessment is a cost of doing business as a privately-operated hospital in the State of Alabama.

A private hospital in Alabama is a hospital other than:

  • Any hospital that is owned and operated by the federal government;
  • Any state-owned hospital;
  • Any publicly owned hospital;
  • A hospital that limits services to patients primarily to rehabilitation services; or
  • A hospital granted a certificate of need as a long- term acute care hospital.

The authority for collecting the hospital assessment fee is provided in Sections 40-26B-70 through 40-26B-88, Code of Alabama 1975.

The rate is 6.0 % of the hospital’s net patient revenue. Assessment amounts are to be paid in equal quarterly installments by the fifteenth business day of each quarter. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid.

The pharmaceutical provider tax is a privilege tax on every provider of pharmaceutical services to citizens of Alabama. This tax may not be passed on to the consumer. The authority for collecting the pharmaceutical provider tax is found in Sections 40-26B-1 through 40-26B-9, Code of Alabama 1975.

The tax is levied at the rate of ten cents (10¢) per prescription filled or refilled for a citizen of Alabama.

The returns and remittances are to be filed and paid monthly through the My Alabama Taxes (MAT) filing system on or before the 20th day of the month following the month during which the tax is accrued. No discounts apply for timely filing.  Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid.

Alabama nursing facilities privilege assessment is an assessment on the business activities of every nursing facility in the State of AlabamaThe privilege assessment imposed is in addition to all other taxes and assessments; and shall apply to each bed in the nursing facility. The current total nursing facilities assessment includes a privilege assessment, a supplemental privilege assessment, a monthly surcharge and a second supplemental privilege assessment. The authority for collecting the Alabama nursing facilities privilege assessment is found in Sections 40-26B-20 through 40-26B-27, Code of Alabama 1975.

The total annual assessment rate for each bed in the facility is $4,756.80 or $396.40 per month per bed.

The returns and remittances are to be filed and paid monthly through the My Alabama Taxes (MAT) filing system on or before the 20th day of the month following the month during which the tax is accrued. No discounts apply for timely filing. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. 

The Drycleaning Trust Fund Fee is a self-insurance program which benefit the drycleaning industry to cover the costs of investigating, assessing, and remediating dry cleaning contamination. This program is jointly administered by the Alabama Department of Environmental Management (“ADEM”) and the Alabama Drycleaning Environmental Response Trust Fund Board (“the Board”). The fee is against each owner or operator of a drycleaning facility located in the State of Alabama who voluntarily notifies the program administrators that it elects to contribute to the Alabama Drycleaning Environmental Response Trust Fund. The authority for collecting the drycleaning trust fund fee is found in Sections 22-30D-1 through 22-30D-12, Code of Alabama 1975.

The applicable fees are as follows:

  • Owner/Operator of an Existing Drycleaning Facility Electing to be Covered (22-30D-6(a)) – 2% of the gross receipts earned in Alabama during the prior calendar year, not to exceed $25,000 per year.
  • New Owner/Operator Acquiring an Existing Drycleaning Facility after 5/24/00 Electing to be Covered (22-30D-6(b)) – 2% of the gross receipts earned in Alabama by the prior owner/operator during the prior calendar year less the amount paid by prior owner/operator, not to exceed $25,000.
  • New Owner/Operator Establishing a New Drycleaning Facility after 5/24/00 Electing to be Covered (22-30D-6(c)) – One-time registration fee of $5,000 for the first year of operation; for the second year of operation, the greater of $5,000 or 2% of the gross receipts earned for prior calendar year, not to exceed $25,000. For each year thereafter, see “Owner/Operator of an Existing Drycleaning Facility” above.
  • Wholesale Distributors of Drycleaning Agents (22-30D-6(d)) – $5,000 per year
  • Owner of Abandoned Drycleaning Facility or Impacted Third Party (22-30D-6(m)) $5,000 per year per site

The registration fee shall be paid quarterly by each owner or operator to the Department of Revenue through the My Alabama Taxes (MAT) filing system: one-fourth (1/4) on April 1, one-fourth (1/4) on July 1, one-fourth (1/4) on October 1, and one-fourth (1/4) on January 1, and shall become delinquent on the 20th day of each said month. The registration fee shall be paid annually by each wholesale distributor to the Department of Revenue on April 1 and shall become delinquent on the 20th day of April. No discounts apply for timely payment. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. 

The 911 prepaid wireless service charge is a tax levied on the retail sales of prepaid wireless telephone services. All seller making retail sales of prepaid wireless telephone services, to include, but not limited to, the sale of prepaid wireless minutes via phone, card, download, code, or any other manner of transaction, shall collect the 911 prepaid wireless service charge from consumers and pay the amount collected to the Department of Revenue.  The authority for collecting the 911 prepaid wireless service charge is found in Section 11-98-5.3, Code of Alabama 1975.

Effective January 1, 2019, the rate of the 911 prepaid wireless charge is $1.86 per retail transaction.

The 911 prepaid wireless service charge is due monthly, with returns and remittances to be filed through the My Alabama Taxes (MAT) filing system on or before the 20th day of the month for the previous month’s sales. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. Section 11-98-5.3, Code of Alabama 1975, provides that the 911 prepaid wireless service provider is permitted to retain a collection fee of four percent (4%) of the 911 prepaid wireless service charges collected by the seller from the prepaid wireless consumers.

The hydroelectric kilowatt hour tax is a license/privilege tax upon each person, firm, corporation, agent or officer engaged in the business of manufacturing and selling hydroelectric power in the State of Alabama. The authority for collecting the hydroelectric kilowatt hour tax is found in Sections 40-21-50 through 40-21-64, Code of Alabama 1975.

The rate of tax is two fifths of a mill upon each kilowatt hour of hydroelectric power manufactured and sold during the preceding calendar year.

The hydroelectric kilowatt hour tax is to be filed and paid through the My Alabama Taxes (MAT) filing system on or before September 25th of each year. No discounts apply for timely filing.  Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid