Montgomery, AL –In an effort to strengthening the strength of Alabama’s small business owners the Governor Kay Ivey has announced a innovative tax reform plan set to begin on October 1st 2023. This initiative is expected to help over 3,000 small-scale businesses across the state, by taking them of the burden of the estimated tax-related payments for Alabama’s Department of Revenue. Alabama Department of Revenue.

Alabama’s economic backbone is made up of the hard work and success of many small, hardworking businesses as Governor Ivey has said she’s committed to easing the financial burden of these businesses. In her State of the State address she asked the Legislature to act to make it easier for small businesses to prosper amid a tense national economic climate.

In response to Governor Ivey’s request for action, the Legislature approved legislation that was later adopted by Governor Ivey on June 9th 2023. The law is revolutionary and eliminates the obligation to make estimates of sales tax for monthly payments for firms that have less than $20,000 in the average monthly sales tax obligation.

Governor Ivey expressed her delight at the positive effects this tax reform for small-businesses will have on 3000 Alabama small-scale businesses, saying, “By liberating small businesses that have monthly sales of less than $500,000 from the requirement of paying estimated monthly sales taxes, and permitting them to pay taxes following the point of sale, they’ll have better cash flow and more operating flexibility.”

Starting on 1 October 2023, small businesses that are affected by the change are required to pay sales tax based upon the sales tax for the preceding month’s receipts. These taxes will be repaid in monthly installments, on or before the 20th day of every month.

To ease the transition process to a more seamless transition, to make the transition easier, Alabama Department of Revenue will examine the quarterly sales tax reports for calendar year 2022and determine the ones that are affected through the law change. Notifications will be sent via letters to all businesses that are affected by the change in threshold.

For more information, businesses are advised to reach out at the Department of Revenue in Alabama’s Sales Tax Administration Section.