Alabama NewsCenter — Another banner year in Alabama tax collections, but inflation will take a bite

By Thomas Spencer
Public Affairs Research Council of Alabama

Alabama tax collections grew at an eye-popping rate in the 2022 fiscal year, with particularly strong growth in income tax collections (up 27% over 2021) and online sales (up more than 20%). The strong collections produced surpluses in both primary state accounts: the Education Trust Fund and the General Fund.

While the growth is sparking talks of rebates and tax cuts, inflation will increase the cost of operating state government. At the same time, rising interest rates and diminishing levels of federal relief will likely slow growth going forward.

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