Rep. Mike Holmes

State Rep. Mike Holmes (R-Wetumpka) 

State Rep. Mike Holmes (R-Wetumpka) has pre-filed legislation to eliminate Alabama’s traditional income tax and sales tax system and replace it with a system of taxation based on consumption.

TPI initially reported Holmes’ tax plan in June.

“For too long, Alabamians have been burdened by a tax system that picks winners and losers in a never-ending maze of tax exemptions, deductions and credits,” Holmes said.  “A system that is fair treats everyone identically by taxing them at the same rate when buying new goods or purchasing services.”

Holmes’s bill, known as the Alabama Economic Freedom Act, would repeal current state income and state, county and municipal sales tax levies and instead place an 8.03% tax rate on every purchase of new products and services. The tax would be collected by merchants at the point of sale. 

Under provisions of the legislation, legal Alabama citizens would be eligible for a monthly rebate to offset the tax on spending, a feature that would prove especially beneficial to families and individuals living at or below the federal poverty level.

The new system would render the Income Tax Division of the Alabama Department of Revenue obsolete while stripping the state government’s ability to dig deeper into the personal pocketbooks of Alabamians, Holmes said. The Sales Tax Division would be redirected to collect the consumption tax.

“The Alabama Economic Freedom Act is a simple plan that people can understand, get excited about and support 100%,” Holmes said. “It removes the heavy hand of government from your wallet and puts each individual in charge of their finances and life.”

The legislation is based upon H.R.25, the Congressional Fair Tax Act of 2019, which was researched, developed and defined with over $22 million in private funding to ensure a bipartisan bill.

More information on Holmes’ proposal is available by visiting, viewing the Alabama State Fair Tax Group on Facebook or contacting Holmes at 334-224-1347 or Chuck Bailey at 256-479-4350.