In Alabama, whether shipping is taxable depends on how it’s billed to the customer. If delivery is part of the sale of taxable goods, it often falls under the sales tax rules.
General Rule
Taxable: Shipping charges are taxable when they are included as part of the sales price of taxable items.
Exempt: Shipping charges may be exempt if they are separately stated on the invoice and only reflect the cost of delivery.
Handling Charges
It's important to note that handling, packing, or service fees are always considered taxable, even if shipping alone could qualify as exempt. Furthermore, if shipping and handling are combined into a single charge on an invoice, the entire amount becomes taxable.
Best Practices for Compliance
Always separate shipping from handling on customer invoices.
State shipping clearly as a delivery fee to show it’s distinct from product pricing.
Review mixed orders (taxable and exempt items) carefully — shipping attached to taxable items will also be taxable.
Example
You sell taxable furniture for $1,000 and add $100 for delivery (separately stated) → the $100 may be exempt.
You sell taxable furniture for $1,000 and add $100 as “Shipping & Handling” → the full $100 is taxable.
Stay Compliant with Kintsugi
Alabama’s rules emphasize the importance of clearly separating delivery costs from other charges. Kintsugi can help ensure your invoices and sales tax collection automatically follow Alabama’s requirements.
⚖️ Important Notice: Sales tax regulations are subject to change without prior notice. For guidance tailored to your business, please consult a qualified tax advisor.