Alabama Sales Tax on Optional Maintenance Contracts Alabama: Sales Tax Handbook

Alabama:

Are Optional Maintenance Contracts subject to sales tax?

While Alabama's sales tax generally applies to most transactions, certain items have special treatment in many states when it comes to sales taxes. This page describes the taxability of optional maintenance contracts in Alabama, including parts purchased for use in performing service under optional maintenance contracts. To learn more, see a full list of taxable and tax-exempt items in Alabama.


General Optional Maintenance Contracts
EXEMPT
Sales of are exempt from the sales tax in Alabama.

Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts
TAXABLE
In the state of Alabama, tax is not due on the purchase of or withdrawal from the inventory of parts which are used in performing services free of charge for a customer under the terms of a manufacturer's extended service contract sold to the customer by the dealer.



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