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HB531 INTRODUCED
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HB531
SLEJL78-1
By Representatives Oliver, Hurst
RFD: Ways and Means Education
First Read: 26-Feb-26
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SLEJL78-1 02/18/2026 MRF (F)MRF 2026-868
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First Read: 26-Feb-26
SYNOPSIS:
This bill would exclude the use or purchase of
natural gas or liquefied petroleum gas by certain
contractors for use or consumption in the construction
of a public highway, road, or bridge from the utility
gross receipts tax and utility service use tax.
This bill would also exempt certain contractors
working on a project for the construction of a public
highway, road, or bridge from payment of state sales
and use taxes on natural gas and liquefied petroleum
gas.
This bill would also allow counties and
municipalities to adopt complimentary local sales and
use tax exemptions.
A BILL
TO BE ENTITLED
AN ACT
Relating to taxation; to amend Sections 40-21-83 and
40-21-103, Code of Alabama 1975, to exclude the purchase or
use of natural gas or liquefied petroleum gas by certain
contractors for public highway, road, or bridge construction
projects from utility gross receipts and utility service use
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projects from utility gross receipts and utility service use
taxes; to exempt the purchase of natural gas and liquefied
petroleum gas made by certain contractors on public highway,
road, or bridge construction projects from state sales and use
taxes; and to allow counties and municipalities to adopt
complimentary local sales and use tax exemptions.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Sections 40-21-83 and 40-21-103 of the Code
of Alabama 1975, are amended to read as follows:
"§40-21-83
There are specifically excluded from the gross receipts
or gross sales of a utility, all revenues derived from any of
the following:
(1) The furnishing of utility services which the State
of Alabama is prohibited from taxing under the Constitution or
laws of the United States of America or the Constitution of
the State of Alabama.
(2) The furnishing of utility services which are
otherwise taxed under Sections 40-23-1 to 40-23-36, inclusive.
(3) Wholesale sales.
(4) The furnishing of electricity, natural gas, or
domestic water for use or consumption by, in, or for the
direct production, generation, processing, storage, delivery,
or transmission of electricity, natural gas, or domestic
water.
(5) The furnishing of electricity to a manufacturer or
compounder for use in an electrolytic or electrothermal
manufacturing or compounding process.
(6) The furnishing of natural gas to a manufacturer or
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(6) The furnishing of natural gas to a manufacturer or
compounder as a chemical raw material in the manufacturing or
compounding of tangible personal property, but not as fuel or
energy.
(7) The furnishing of natural gas to be used by a
manufacturer or compounder to chemically convert raw materials
prior to the use of the converted raw materials in an
electrolytic or electrothermal manufacturing or compounding
process.
(8) The use or consumption of electricity by an
incorporated municipality, a board, or corporation organized
under the authority of any incorporated municipality in
furnishing or providing street lighting or traffic-control
systems; the use or consumption of telephone services by an
incorporated municipality in providing fire alarm systems; and
the use or consumption of domestic water by an incorporated
municipality in extinguishing fires, explosions, or
conflagrations.
(9) The furnishing of natural gas or electricity for
use or consumption as fuel or energy in and for the heating of
poultry houses.
(10) The furnishing of utility services through the use
of a prepaid telephone calling card .
(11)a. The furnishing of natural gas or liquefied
petroleum gas for use or consumption as fuel or energy in the
construction of any public highway, road, or bridge.
b. This exclusion may only be claimed by a contractor
licensed by the State Licensing Board for General Contractors,
or a subcontractor working under the same contract, for use
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or a subcontractor working under the same contract, for use
pursuant to a written contract for and on behalf of a
governmental entity as defined in Section 40-9-14.1 ."
"§40-21-103
The storage, use, or other consumption of utility
services in the State of Alabama is hereby specifically
excluded from the tax herein levied:
(1) Whenever the State of Alabama is prohibited from
taxing such storage, use, or consumption under the
Constitution or laws of the United States of America or the
Constitution of the State of Alabama;
(2) Whenever any tax relating to the sale, use,
storage, or consumption of said utility services shall be
levied under the provisions of Article 2 of Chapter 23 of this
title, or under the provisions of Sections 40-23-1 through
40-23-36 or the Alabama Transaction Tax Act of 1992 if enacted
into law;
(3) Whenever the purchase of said utility services
shall have been at a wholesale sale;
(4) Whenever electricity, natural gas, or domestic
water shall have been used or consumed directly in or for the
production, generation, processing, storage, delivery, or
transmission of electricity, natural gas, or domestic water;
(5) Whenever electricity purchased for storage, use, or
other consumption is used or consumed by a manufacturer or
compounder in an electrolytic or electrothermal manufacturing
or compounding process;
(6) Whenever natural gas purchased for storage, use, or
other consumption is used or consumed by a manufacturer or
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other consumption is used or consumed by a manufacturer or
compounder as a chemical raw material in the manufacturing or
compounding of tangible personal property, but not as fuel or
energy;
(7) Whenever natural gas purchased for storage, use, or
other consumption is used by a manufacturer or compounder to
chemically convert raw materials prior to the use of such
converted raw materials in an electrolytic or electrothermal
manufacturing or compounding process;
(8) Whenever the sales price of said utility services
shall be included as a part of the gross receipts or gross
sales of a utility subject to the utility gross receipts tax
for the purpose of calculating the utility gross receipts tax
payable by said utility;
(9) Whenever electricity purchased for storage, use, or
other consumption is used or consumed in a process for the
isotopic enrichment of uranium and when said electricity is
purchased from a subsidiary corporation of the corporation
engaged in the isotopic enrichment of uranium; and
(10) Whenever utility services are furnished through
the use of a prepaid telephone calling card ; and
(11)a. Whenever natural gas or liquefied petroleum gas
purchased for use or consumption is used or consumed as fuel
or energy in the construction of any public highway, road, or
bridge.
b. This exclusion may only be claimed by a contractor
licensed by the State Licensing Board for General Contractors,
or a subcontractor working under the same contract, for use
pursuant to a written contract for and on behalf of a
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pursuant to a written contract for and on behalf of a
governmental entity as defined in Section 40-9-14.1 ."
Section 2. (a)(1) The gross proceeds from the sale of
natural gas and liquefied petroleum gas for use in the
construction of any public highway, road, or bridge are exempt
from state sales and use taxes.
(2) This exemption may only be claimed by a contractor
licensed by the State Licensing Board for General Contractors,
or a subcontractor working under the same contract, for use
pursuant to a written contract for and on behalf of a
governmental entity as defined in Section 40-9-14.1 .
(b) Any county or municipality may exempt the products
provided in subdivision (a)(1) from county or municipal sales
and use taxes under the same conditions provided in
subdivision (a)(2) and in accordance with Section 40-23-4.01,
Code of Alabama 1975.
Section 3. This act shall become effective on September
1, 2026.
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