HB388 • 2026

Taxation; to exempt certain community foundations from sales and use taxes

Taxes

Enacted

This bill passed the Legislature and reached final enactment based on the latest official action.

Sponsor: Faulkner
Last action: 2026-04-16
Official status: Enacted
Effective date: Section 1

Plain English Breakdown

The official text states Section 1 is effective immediately upon enactment, but explicitly sets the exemption period start date as September 1, 2026. The summary reflects this specific future start date for the tax break.

Tax Exemption for Specific Community Foundations in Alabama

This law exempts ten named community foundations from state sales and use taxes between September 2026 and August 2031, requires them to file annual reports with the Department of Revenue, and allows local governments to choose whether to offer similar tax breaks.

What This Bill Does

Exempts ten specific community foundations listed in the bill from paying Alabama state sales and use taxes between September 1, 2026, and August 31, 2031.
Requires these organizations to submit an annual informational report to the Department of Revenue consistent with existing reporting rules.
Allows counties and municipalities to choose whether or not to exempt these same foundations from local sales and use taxes.
Repeals a previous law that provided similar tax exemptions for these entities.

Who It Names or Affects

The ten named community foundations listed in the bill, including those serving Birmingham, Huntsville, Decatur, and other regions of Alabama.
Local county and municipal governments deciding on local tax rules.
The Department of Revenue collecting reports from these organizations.

Terms To Know

Sales and use taxes: Fees added to the price of goods or services when they are bought or used within a state or local area.
Community foundation: A nonprofit organization that collects donations from many people to support charitable causes in a specific geographic area.

Limits and Unknowns

The tax exemption only lasts for five years, ending on August 31, 2031.
Local governments are not required to offer the same tax break; they may choose whether or not to exempt these groups from local taxes.

Bill History

2026-04-16 House
Enacted
2026-04-08 House
Delivered to Governor
2026-04-08 Senate
Signature Requested
2026-04-07 Senate
Motion to Read a Third Time and Pass - Adopted Roll Call 1214 (Yeas 34, Nays 0)
2026-04-07 Senate
Third Reading in Second House (Yeas 34, Nays 0)
2026-04-07 House
Enrolled
2026-04-07 House
Ready to Enroll
2026-03-19 Senate
Read for the Second Time and placed on the Calendar
2026-03-18 Senate
Reported Out of Committee Second House
2026-03-03 House
Motion to Read a Third Time and Pass - Adopted Roll Call 671 (Yeas 105, Nays 0)
2026-03-03 House
Third Reading in House of Origin (Yeas 103, Nays 0)
2026-03-03 Senate
Pending Committee Action in Second House
2026-03-03 Senate
Read for the first time and referred to the Senate Committee on Finance and Taxation Education
2026-02-12 House
Read for the Second Time and placed on the Calendar
2026-02-11 House
Reported Out of Committee House of Origin
2026-02-05 House
Pending Committee Action in House of Origin
2026-02-05 House
Read for the first time and referred to the House Committee on Ways and Means Education

Official Summary Text

This act adds Section 40-9-39.41 to the Code of Alabama 1975, to: (1) exempt certain community foundations from the state sales and use taxes beginning September 1, 2026, through August 31, 2031; (2) require these entities to annually report information regarding the exemption to the Department of Revenue; and (3) authorize counties and municipalities to exempt these entities from local sales and use taxes. This act repeals Section 40-9-39.4, Code of Alabama 2975, which exempted certain community foundations from state, county, and municipal sales and use taxes.

Current Bill Text

Read the full stored bill text

HB388 ENROLLED
Page 0
HB388
PS97VER-2
By Representative Faulkner
RFD: Ways and Means Education
First Read: 05-Feb-26
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HB388 Enrolled
Page 1
First Read: 05-Feb-26
Enrolled, An Act,
Relating to sales and use taxes; to add Section
40-9-39.41 to the Code of Alabama 1975, to exempt certain
community foundations from state sales and use taxes; to allow
municipalities and counties to exempt these entities from
local sales and use taxes; and to repeal Section 40-9-39.4,
Code of Alabama 1975, regarding the existing community
foundation sales and use tax exemptions.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Section 40-9-39.41 is added to the Code of
Alabama 1975, to read as follows:
§40-9-39.41
(a) All of the following community foundation entities
are exempted from paying any state sales and use taxes:
(1) The Black Belt Community Foundation.
(2) The Central Alabama Community Foundation.
(3) The Community Foundation of Greater Birmingham.
(4) The Community Foundation of Greater Decatur.
(5) The Community Foundation of Greater Huntsville.
(6) The Community Foundation of Northeast Alabama.
(7) The Community Foundation of South Alabama.
(8) The Community Foundation of West Alabama.
(9) The Limestone Area Community Foundation.
(10) The Walker Area Community Foundation.
(b) Each entity listed in subsection (a) shall file an
annual informational report in a manner as prescribed by the
Department of Revenue. The information on such reports shall
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HB388 Enrolled
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Department of Revenue. The information on such reports shall
be consistent with the information required by the Department
of Revenue pursuant to Section 40-9-61 and rules adopted
thereunder. Information provided pursuant to this section is
exempted from the confidentiality provisions of Section
40-2A-10, and shall be provided by the Department of Revenue
to the Legislative Services Agency, Fiscal Division, on an
annual basis.
(c) The sales and use tax exemption authorized under
this section shall be effective September 1, 2026, and shall
continue through August 31, 2031.
(d) Any county or municipality may exempt the entities
listed in subsection (a) from county or municipal sales and
use taxes in accordance with Section 40-23-4.01.
Section 2. Section 40-9-39.4, Code of Alabama 1975,
relating to the existing sales and use tax exemptions for the
entities in Section 1(a), is repealed.
Section 3. Section 1 of this act shall become effective
immediately. Section 2 of this act shall become effective
January 1, 2027.
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HB388 Enrolled
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January 1, 2027.
________________________________________________
Speaker of the House of Representatives
________________________________________________
President and Presiding Officer of the Senate
House of Representatives
I hereby certify that the within Act originated in and
was passed by the House 03-Mar-26.
John Treadwell
Clerk
Senate 07-Apr-26 Passed
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