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HB434 • 2026

Simplified sellers use tax, distribution of proceeds revised

Simplified sellers use tax, distribution of proceeds revised

Education Taxes
Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor
England
Last action
2026-02-12
Official status
Pending Committee Action in House of Origin
Effective date
Not listed

Plain English Breakdown

The official text contains crossed-out and new percentage figures side-by-side (e.g., 'FiftyThirty-seven', '75 percent to the State General Fund' vs previous allocations), making it unclear which numbers are final without a clean version of the bill.

HB434: Changes to How Simplified Sellers Use Tax Money Is Shared

This bill changes the rules for sharing money collected from the simplified sellers use tax by reducing the share sent to a state education fund and sending more directly to local school boards.

What This Bill Does

  • Reduces the percentage of tax money given to the Education Trust Fund.
  • Increases the amount of tax money sent directly to local boards of education based on student numbers.
  • Changes how much money goes to counties and cities by adjusting their specific percentages.
  • Updates the schedule for sending payments from monthly to quarterly in some cases.
  • Removes an old law that described how these taxes were shared before this change.

Who It Names or Affects

  • The Education Trust Fund
  • Local boards of education across Alabama
  • County commissions and their general funds
  • Municipalities (cities) in the state

Terms To Know

Simplified Sellers Use Tax (SSUT)
A tax collected from sellers who do not collect sales tax, used to fund government programs.
Education Trust Fund
A state account that holds money specifically for education purposes before it is distributed.
Prorated basis
Sharing an amount based on a specific ratio, such as the size of a population or number of students.

Limits and Unknowns

  • The bill text shows conflicting numbers for some percentages due to edits made during drafting.
  • This law only takes effect starting October 1, 2026.

Bill History

  1. 2026-02-12 House

    Pending Committee Action in House of Origin

  2. 2026-02-12 House

    Read for the first time and referred to the House Committee on Ways and Means Education

Official Summary Text

Simplified sellers use tax, distribution of proceeds revised

Current Bill Text

Read the full stored bill text 
HB434 INTRODUCED
Page 0
HB434
PS4BJRE-1
By Representative England
RFD: Ways and Means Education
First Read: 12-Feb-26
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PS4BJRE-1 12/10/2025 MRF (F)MRF 2025-3633
Page 1
First Read: 12-Feb-26
SYNOPSIS:
Under existing law, the proceeds from the
simplified sellers use tax (SSUT) are distributed to
the State General Fund, Education Trust Fund, and the
counties and municipalities in this state.
This bill would reduce the portion allocated to
the Education Trust Fund and reallocate these SSUT
proceeds to the local boards of education.
A BILL
TO BE ENTITLED
AN ACT
Relating to the simplified sellers use tax; to amend
Section 40-23-197, Code of Alabama 1975, to reduce the
Education Trust Fund share of the distributions and to
reallocate that portion of SSUT proceeds to the local boards
of education ; and to repeal Section 40-23-197.1, Code of
Alabama 1975, regarding monthly distributions of SSUT
proceeds.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Section 40-23-197, Code of Alabama 1975, is
amended to read as follows:
"§40-23-197
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HB434 INTRODUCED
Page 2
"§40-23-197
(a) The proceeds of the simplified sellers use tax paid
pursuant to this part shall be appropriated to the department,
which shall retain the amount necessary to fund the
administrative costs of implementing and operating the program
and to cover the amounts paid for refunds authorized in
Section 40-23-196. The balance of the amounts collected shall
be distributed as follows:
(1) FiftyThirty-seven and one-half percent to the State
Treasury and allocated 75 percent to the State General Fund .
and
(2) 25 Eleven and one-quarter percent to the State
Treasury and allocated to the Education Trust Fund.
(3) One and one-quarter percent to the local boards of
education in the state on the basis of the ratio of the
average daily membership of each board to the total statewide
average daily membership for the preceding school year.
(2)(4) Twenty-five percent Twenty percent to each the
county counties in the state and deposited into the general
fund of the respective county commission on thea prorated
basis according of the ratio of the to population of each
county to the total population of all counties in the state as
determined in the most recent federal census prior to the
distribution.
(3)(5) Twenty-five Thirty percent of funds to be
distributed to each the municipality municipalities in the
state on a prorated the basis of the ratio of the according to
population of each municipality to the total population of all
municipalities in the state as determined in the most recent
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HB434 INTRODUCED
Page 3
municipalities in the state as determined in the most recent
federal census prior to the distribution.
(b) Effective for tax periods beginning on or after
January 1, 2019, the net proceeds after the distribution
provided in subdivision (1) of subsection (a) shall be
distributed 60 percent to each municipality in the state on a
basis of the ratio of the population of each municipality to
the total population of all municipalities in the state as
determined in the most recent federal census prior to
distribution and 40 percent to each county in the state, and
deposited into the general fund of the respective county
commission, on a basis of the ratio of the population of each
county to the total population of all counties in the state as
determined in the most recent federal census prior to the
distribution.
(c) The distribution of the proceeds from the
simplified sellers use tax distributed pursuant to
subdivisions (a)(3) through (5) paid to counties and
municipalities shall occur quarterly monthly in a manner
prescribed by the department."
Section 2. Section 40-23-197.1, Code of Alabama 1975,
regarding monthly distributions of simplified sellers use tax
proceeds, is repealed.
Section 3. This act shall become effective on October
1, 2026.
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