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SB 107

Sales and use tax, simplified sellers use tax (SSUT), recalculation of distributions based on annexations, deannexations, or incorporations, on fifth year after release of census commencing on January 1, 2026

2025 Regular Session Introduced by David Sessions

Alabama bill requiring cities' sales tax allocations be recalculated every five years following census based on annexation/deannexation changes, shifting revenue between growing and shrinking municipalities.

Currently Indefinitely Postponed
#taxation&revenue
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Bill Summary · SB 107

Legislative bill overview

SB 107 modifies Alabama's sales and use tax distribution system by requiring recalculation of tax allocations to municipalities based on population changes from annexations, deannexations, or incorporations. The recalculation would occur five years after the decennial census release, beginning with the 2020 census data in 2026.

Why is this important

Municipal tax revenue directly funds local services like schools, police, and infrastructure. Shifting how revenues are allocated based on boundary changes could significantly impact city budgets—some municipalities would gain revenue while others lose it, potentially affecting service delivery and financial planning. This is particularly consequential for growing cities that annex new territory and shrinking municipalities that lose population.

Potential points of contention

  • Winner and loser municipalities: Cities experiencing annexation gains would benefit while those losing population or territory would face revenue cuts, creating political opposition from affected areas
  • Implementation complexity: Recalculating distributions across the state's tax system five years after census data release could create administrative challenges and lag-time issues
  • Fairness debates: Questions over whether tax distributions should follow current boundaries or historical ones, and whether a five-year delay adequately reflects real demographic changes

Compiled from official sources — confirm details with the bill’s official record.

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