Alabama Sales Tax: Are Shipping Charges Taxable?
In Alabama, shipping charges are generally non-taxable when they are separately stated on the invoice and the delivery is made by a common carrier or the U.S. Postal Service. However, delivery charges may become taxable if the seller uses its own vehicle or includes shipping in the sales price.
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For e-commerce sellers, shipping taxability is one of the most common sales tax questions. Each U.S. state has its own rules, and Alabama has a relatively clear approach to separately stated shipping charges.
Short Answer
In Alabama, shipping charges are generally non-taxable if they are separately stated on the invoice and the delivery is made by a common carrier or the U.S. Postal Service.
According to the Alabama Department of Revenue, transportation charges are not subject to sales or use tax when delivery is made by common carrier or USPS, provided that the charges are separately stated and identifiable from other charges. Source: Alabama Department of Revenue
When Shipping Is Non-Taxable in Alabama
Shipping charges are generally non-taxable when:
- Delivery is made by a common carrier or USPS;
- The shipping or freight charge is separately stated on the invoice;
- The transportation charge is clearly identifiable from other charges;
- The purchaser pays the shipping charge directly or indirectly.
When Shipping May Be Taxable
Shipping charges may become taxable in Alabama if:
- The seller delivers the goods using its own vehicle;
- The shipping charge is included in the sales price of the product;
- The seller does not separately state the delivery charge on the invoice;
- Shipping and handling are combined in a way that makes the charge difficult to separate.
Practical Tips for E-Commerce Sellers
Online sellers with Alabama sales tax nexus should:
- Separately state shipping charges on invoices;
- Keep carrier invoices and delivery records;
- Avoid embedding shipping into product prices;
- Review platform tax settings for Alabama;
- Separate handling fees from shipping fees where possible;
- Confirm whether marketplace facilitator rules apply.
Example
If a seller ships a $100 taxable product to an Alabama customer and separately charges $10 for USPS shipping, the seller generally collects sales tax only on the $100 product price, not the $10 shipping charge.
However, if the invoice shows a single total price of $110 including shipping, the full amount may be treated as part of the taxable sales price.
Conclusion
Alabama generally treats separately stated shipping charges as non-taxable when delivery is made by a common carrier or USPS. However, sellers should be careful when using their own vehicles, combining shipping with handling fees, or including shipping in the product price.
Sources: Alabama Department of Revenue