MADISON — On Monday, Madison became the first city in the state of Alabama to exempt hearing aids from sales and use tax. The City Council unanimously voted to pass ordinance 2024-206 to amend the Madison and City Code after hearing remarks by Madison Mayor Paul Finley and city attorney Brian Kilgore, who were present at the meeting.
In Alabama, both the state and municipalities collect sales tax on purchases. Earlier this year, the Alabama state legislature began considering tax relief for Alabama citizens, including tax credit and exemption bills. Alabama state legislature Bill HB 51 was enacted on May 16, providing a five-year sales and use state tax exemption for purchases of hearing instruments, including hearing aids, and authorized localities to exempt them as well.
Finley and Kilgore commented favorably on the proposal before the vote. "I think it is critical for folks, especially the elderly and those on fixed incomes,” said Finley, adding that removing the tax on hearing aids would make a real difference in their lives. Finley noted that the city had made less than $20,000 in sales tax revenue from hearing aids in 2023, and about $16,000 during the first half of this year, but said he thought the loss of that relatively small amount of tax revenue would be outweighed by the benefit to the citizens of Madison. Finley mentioned his own mother as an example of someone who benefited from use of a hearing aid, as it facilitated her ability to engage in conversations with friends and family.
Kilgore explained to the Council that the city had looked at the financial aspects of the proposed tax cut and determined that removing the tax on hearing aids would not impose any significant impact on city revenue. “If [the ordinance] were to pass, that would exempt 3.5% of the normal sales tax that [purchasers of hearing aids would] have to pay,” said Kilgore. “There’s a total of 9% [sales tax] that people normally pay, and this would eliminate 3.5% of that.”
The Food and Drug Administration (FDA) regulates hearing aids, medical devices that can be worn in or behind the ear. The average price of hearing aids can run anywhere from about $900 to over $6000, so a 3.5% reduction in the sales tax imposed can save a purchaser of hearing aids from $30 to over $210 on the purchase of each device just from the exemption by the city, and from $81 to $540 with the state and local tax exemption combined.
The new City of Madison ordinance exempting sales and use tax on hearing aids, and the state law doing the same, will affect purchases of hearing aids beginning October 1.
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