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AlabamaHB5292025 Regular SessionHouseWALLET

Taxation, taxation of vapor products provided for

Sponsored By: David Faulkner (Republican)

Enacted

Taxation & Revenue

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Bill Overview

Analyzed Economic Effects

8 provisions identified: 3 benefits, 4 costs, 1 mixed.

Limits on local vapor sales taxes

After the act's October 1, 2025 effective date, local governments cannot add taxes or license fees on consumable vapor sales. The law voids earlier business-license fees based on sales volume and bars municipal business licenses measured by that volume. Apart from those volume-based fees, local taxes and license fees already imposed by October 1, 2025 remain in place. Municipalities can continue issuing permits under existing law.

Tax discount for timely vapor sellers

Licensed vapor-tax filers can deduct 4.75% of the tax payable when they file and pay on time. They lose the discount if they do not pay the full amount shown as due on the return. This discount goes to the business, not directly to shoppers.

Listing path for nicotine products under review

Manufacturers can request directory listings for qualifying alternative nicotine products still under federal review. The product must have been on the U.S. market as of April 14, 2022. The manufacturer must have applied for federal premarket review before May 14, 2022, and that application must remain under review. The manufacturer must also provide the product's federal submission tracking number.

New tax on vapor products

Beginning October 1, 2026, Alabama taxes covered vapor products at $0.10 per milliliter. The tax covers wholesale sales and imports for use, consumption, or retail sale in Alabama. Wholesalers and importers pay the tax, and shoppers may face higher prices. Sales between licensed wholesalers and exports with proof are exempt.

Vapor distributors pay annual permit fees

Distributors of alternative nicotine products or electronic nicotine delivery systems need a separate, nontransferable permit for each distribution location. Each location costs $150 a year, funding Alcoholic Beverage Control Board enforcement. Each private-property vending machine also needs a separate permit; traditional tobacco permits have no fee. The Board or law enforcement can seize vapor products offered or sold without the required permit. Seized products are contraband and must be destroyed.

Vapor sellers face reporting penalties

Sellers need a Revenue Department license before selling covered vapor products whose tax has not been paid. Taxpayers must file monthly statements and pay by the 20th; tobacco-product reports must include consumable vapor products. People handling taxable products must keep transaction records; purchasers must keep invoices on-site for 90 days and records for three years. Missing required reports or records is a Class B misdemeanor, with each month counting as a separate offense. A violating taxpayer can also be stopped from doing business until they comply.

Vapor makers face product listing rules

Consumable vapor products join Alabama's e-liquid certification and public product-directory rules, which tie listings to federal application or authorization status. Manufacturers certify under penalty of perjury and pay $2,000 initially, then $500 each year; the directory is updated monthly. Manufacturers must report federal authorization changes within 30 days. When federal standards change, proof of compliance is due within 30 days after compliance becomes mandatory; missing proof can cause removal. Offering or distributing unlisted products brings a $1,000 fine per product per day; other directory violations bring $500 per offense.

State and local governments share vapor taxes

Beginning October 1, 2026, Alabama distributes vapor-tax proceeds every three months after retaining tax-collection costs. The State General Fund gets 50%; counties share 25%, and municipalities share 25%. Each county's share follows its share of state population; each municipality's share follows its share of total municipal population. Population counts come from the latest federal census before distribution. Counties and municipalities receive nothing if they levy wholesale or retail taxes on these products or substantially similar products.

Sponsors & Cosponsors

Sponsor

  • David Faulkner

    Republican • House

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 396 • No: 19

Senate vote • 5/6/2025

Motion to Read a Third Time and Pass - Adopted Roll Call 983

Yes: 33 • No: 0

House vote • 4/10/2025

Motion to Adopt - Adopted Roll Call 810

Yes: 88 • No: 0 • Other: 14

House vote • 4/10/2025

Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 811

Yes: 86 • No: 10 • Other: 7

House vote • 4/10/2025

Third Reading in House of Origin

Yes: 97 • No: 3 • Other: 3

House vote • 4/10/2025

Motion to Adopt - Adopted Roll Call 809

Yes: 92 • No: 6 • Other: 5

Actions Timeline

  1. Enacted

    5/14/2025House

  2. Motion to Read a Third Time and Pass - Adopted Roll Call 983

    5/6/2025Senate

  3. Ready to Enroll

    5/6/2025House

  4. Ready to Enroll

    5/6/2025House

  5. Enrolled

    5/6/2025House

  6. Signature Requested

    5/6/2025Senate

  7. Delivered to Governor

    5/6/2025House

  8. Read for the Second Time and placed on the Calendar

    4/17/2025Senate

  9. Reported Out of Committee Second House

    4/16/2025Senate

  10. Read for the first time and referred to the Senate Committee on Fiscal Responsibility and Economic Development

    4/15/2025Senate

  11. Pending Committee Action in Second House

    4/15/2025Senate

  12. Third Reading in House of Origin

    4/10/2025House

  13. Ways and Means General Fund Engrossed Substitute Offered

    4/10/2025House

  14. Motion to Adopt - Adopted Roll Call 809

    4/10/2025House

  15. Stubbs 1st Amendment Offered

    4/10/2025House

  16. Motion to Adopt - Adopted Roll Call 810

    4/10/2025House

  17. Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 811

    4/10/2025House

  18. Engrossed

    4/10/2025House

  19. Ways and Means General Fund 1st Amendment

    4/9/2025House

  20. Reported Out of Committee House of Origin

    4/9/2025House

  21. Read for the Second Time and placed on the Calendar

    4/9/2025House

  22. Read for the first time and referred to the House Committee on Ways and Means General Fund

    4/3/2025House

  23. Pending Committee Action in House of Origin

    4/3/2025House

Bill Text

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