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Governor Ivey signs new law intended to help small businesses


Governor Kay Ivey signed House Bill 77 into law on Friday. The legislation intends to help small businesses in Alabama.

HB 77 increases the threshold for submitting estimated monthly sales tax payments from $5,000 to $20,000 in average monthly sales tax liability. It also gives small businesses earning less than $500,000 in monthly sales the option to opt out of prepaying taxes beginning Oct. 1. The Alabama Department of Revenue said roughly 3,100 businesses are no longer required to prepay taxes after this date. However, Alabama Retail Association (ARA) reported these businesses will still remit for the prior month by 4 p.m. on the 20th of each month.

After signing HB 77 into law, Ivey issued an online statement.

“Our economic stability begins and ends with the success of our small businesses, and it’s imperative that leaders at all levels of government actively look for ways to cut red tape and help them thrive,” Ivey said in a statement. “Eliminating the requirement for our small businesses with less than $500,000 in monthly sales to prepay taxes is a no-brainer. It not only frees up capital but also allows owners to focus solely on turning a profit every month and staying in business. This is an example of good government, and I commend the men and women of the Legislature for passing this bipartisan legislation for the people of our state.”

Earlier this year, Ivey called on the state legislature to help create economic stability for Alabama businesses. In her 2023 State of the State Address, Ivey specifically proposed that lawmakers reduce the financial load shouldered by small businesses by passing legislation to lower their prepaid sales tax burden.

This is not the first law targeting the tax burdens of small businesses. Ivey signed House Bill 82 into law last year, raising the prepayment threshold from $2,500 to $5,000 in average monthly sales tax liability. ARA reported this legislation impacted about 2,500 businesses. Both House Bills 77 and 82 were sponsored by Rep. Danny Garrett of Trussville.

More information on HB 77 can be found on the Alabama Legislature website.

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