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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 source material does not provide specific details on the exact amounts or impacts, leaving these points as limits and unknowns.

Changes to How Sales Tax Money is Spent

This bill changes how money from a special sales tax is shared, giving less to the Education Trust Fund and more directly to local schools.

What This Bill Does

  • Reduces the amount of simplified sellers use tax (SSUT) money that goes to the Education Trust Fund.
  • Gives the part of SSUT money that used to go to the Education Trust Fund directly to local school boards instead.

Who It Names or Affects

  • The state government, which collects and distributes the simplified sellers use tax (SSUT).
  • Local school boards that receive more money directly.
  • Counties and municipalities that still get part of the SSUT but now on a monthly basis instead of quarterly.

Terms To Know

Simplified Sellers Use Tax (SSUT)
A special sales tax collected by the state to fund various programs, including education.
Education Trust Fund
A fund that holds money for educational purposes in Alabama.

Limits and Unknowns

  • The bill does not specify how much less money will go to the Education Trust Fund.
  • It is unclear what happens to administrative costs of the SSUT program after this change.
  • The exact impact on local school budgets and educational programs is not detailed.

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
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"§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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