How to untax groceries without costing education a dime
It’s crucial to replace the grocery tax revenue without hurting the people who would benefit most from the tax’s elimination. Fortunately, Alabama has a way to untax groceries while protecting both struggling families and education funding.
That solution would be to end an unusual tax loophole that primarily benefits the richest Alabamians: the federal income tax (FIT) deduction. This loophole allows people to deduct their federal income tax payments on their state income taxes. Because wealthy people pay more in federal income taxes on average, 80% of the FIT deduction’s benefit goes to the top 20% of taxpayers in Alabama.