This amendment adds a rule that the credit card fee tax exemption only applies to county or city taxes if they follow specific approval steps from Act 2025-280.
Alabama2026Enacted
SB221
SB221: Excluding Credit Card Fees from Sales Tax
Last scannedAug 24, 2026, 9:06 AM
In one sentence
This law stops sales and use tax from being charged on credit card transaction fees added to purchases made with electronic payment methods.
What it does
- Removes credit card transaction fees from the total amount used to calculate sales and use taxes for electronic payments.
- Defines 'credit card' to include debit cards, prepaid cards, and other digital devices approved by a payment network, but excludes paper checks.
- Requires the Department of Revenue to create rules so stores can follow this new tax method correctly.
- Sets September 1, 2026, as the date when these changes officially start.
Who it affects
- Businesses and sellers who charge customers fees for using credit or debit cards.
- Customers in Alabama who pay with electronic payment methods like cards or digital codes.
- The Department of Revenue, which must write the rules to manage this change.
Limits and unknowns
- The law does not specify exactly how much money stores will save until the Department of Revenue writes its specific rules.
- This change only applies to fees for electronic payments and does not affect taxes on other parts of a purchase price.
Plain language
Terms to know
- Credit Card Transaction Fee
- A charge added to a purchase price to cover costs that banks or payment networks charge to stores for processing card payments.
- Electronic Payment Transaction
- Any sale where the buyer uses a debit card, credit card, or similar digital device approved by a payment network to pay from their account or line of credit.
Official record
Sources
Official summary
This act excludes credit card transaction fees charged for an electronic payment transaction from the amount on which sales and use tax is assessed.
Official activity
Bill history
- EnactedSenate
- Motion to Read a Third Time and Pass - Adopted Roll Call 1297 (Yeas 75, Nays 18)House
- Third Reading in Second House (Yeas 83, Nays 15)House
- Delivered to GovernorSenate
- Signature RequestedHouse
- EnrolledSenate
- Ready to EnrollSenate
- Carried Over to the Call of the ChairHouse
- Read for the Second Time and placed on the CalendarHouse
- Reported Out of Committee Second HouseHouse
- Motion to Read a Third Time and Pass - Adopted Roll Call 952 (Yeas 33, Nays 0)Senate
- Stewart motion to Adopt - Lost Roll Call 951 (Yeas 6, Nays 28)Senate
- Pending Committee Action in Second HouseHouse
- Read for the first time and referred to the House Committee on Ways and Means EducationHouse
- Stewart 1st Amendment OfferedSenate
- Third Reading in House of Origin (Yeas 28, Nays 0)Senate
- Carried OverSenate
- Read for the Second Time and placed on the CalendarSenate
- Reported Out of Committee House of OriginSenate
- Pending Committee Action in House of OriginSenate
Changes
Amendments
1 stored