Commercial fishermen and seafood businesses along Alabama’s Gulf Coast will soon see significant tax relief under a new state law aimed at putting the seafood industry on equal financial footing with traditional agriculture. Gov. Kay Ivey has signed the legislation, which takes effect Jan. 1, 2023, bringing what supporters describe as long-overdue tax fairness to an industry that has operated for decades under a heavier tax burden than land-based farming.
The measure was sponsored by state Rep. Chip Brown, who represents the Hollingers Island area, and carried through the Alabama Senate by Sen. David Sessions of Grand Bay. Both lawmakers represent portions of Mobile County, home to a large share of Alabama’s commercial fishing fleet and seafood processing operations, including the historic shrimping communities along Bayou La Batre and Mobile Bay.
Under current Alabama law, only vessels used in commercial shrimping qualify for an ad valorem tax exemption. The new law broadens that exemption to cover all forms of commercial fishing operating in the state, including oyster farms and hand-tonging operations that harvest oysters from Alabama’s public reefs and leased water bottoms.
The legislation also exempts bait, equipment and other materials used by commercial fishing operations from state sales and use taxes. Additionally, it reduces the sales tax on purchases of commercial fishing vessels, along with the equipment and machinery installed on them, to one-and-a-half percent — matching the rate already applied to farm and agricultural equipment purchases. A companion provision lowers the excise tax on the storage, use or other consumption of commercial fishing vessels and machinery to that same one-and-a-half percent rate, mirroring treatment given to the rest of Alabama’s agricultural sector.
Supporters of the bill argue that commercial fishing operations have long been treated as a separate and less-favored category than other food producers, despite performing an economically similar role by harvesting food for consumers. Under the new law, the tax exemptions and reduced rates that farmers and ranchers have received for years will now extend to shrimpers, oystermen and other commercial seafood harvesters working Alabama’s coastal waters.
Commercial fishing remains a major economic driver for Mobile County and the broader Alabama Gulf Coast, supporting harvesters, dock workers, processors and related businesses that depend on a steady supply of local shrimp, oysters and finfish. Industry advocates have said the reduced tax burden should help ease rising operating costs for boat owners and encourage continued investment in vessels and equipment used in the trade.
The new exemptions and reduced rates will take effect at the start of 2023, giving fishing businesses time to prepare for the change as they plan equipment purchases and vessel maintenance heading into the new year.