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Use Tax

  • Use Tax


Sections 40-23-60 through 40-23-88, Code of Alabama 1975.

Excise tax on tangible personal property purchased outside Alabama for storage, use, or other consumption in Alabama.

4% of selling price of general merchandise and items.
2% of selling price of mobile home set-up materials and related supplies.
2% of net trade difference of new and used automotive vehicles.
1.5% of selling price of machinery used in mining and manufacturing.
1.5% of net trade difference of farm machines, machinery, or equipment.

Note: Each purchaser liable for use tax on tangible personal property is entitled to full credit for the combined amount of legally imposed sales or use taxes paid by the purchaser with respect to the same property to another state and any subdivision thereof.

In addition to the above, counties and municipalities may levy local use taxes ranging in rate between 0.1% to 5%. Some of the local use taxes are collected by ALDOR, third party administrators, and others are self-administered.

Education Trust Fund, except for 42% of the 2% tax on gross proceeds from sale of automotive vehicles which will go to the General Fund, and revenues from the repealed discount which go to the Foster Children’s Program and the Department of Conservation and Natural Resources.

After the distribution of the 2% tax on gross proceeds from the sales of automotive vehicles and other distributions provided in Section 40-23-85, 75% of future collections from remote sellers and 53% of all current use taxes will be deposited into the General Fund. An amount sufficient to fund the Children’s Health Insurance Program (CHIP) will be distributed annually as a first charge against the amounts allocated to the General Fund under Section 40-23-85. It is the legislative intent that all amounts
collected on transactions involving a seller located outside the state when the property is shipped or transported from outside the state will be considered use tax for the purpose of distribution, regardless of whether the taxes are considered sales taxes for other purposes.