Alabama Cash Rounding Notice for In-Person Cash Transactions
Summary
Alabama's Department of Revenue issued guidance on Act 2026-548, which authorizes a new rounding method for in-person cash transactions effective April 17, 2026. The rounding method applies the total amount of any cash transaction to the nearest five cents using a five-tier system based on the final digit. The rule applies only to cash payments and explicitly excludes transactions with government entities.
“Act 2026-548 authorizes the rounding of the total amount of any in-person cash transaction to the nearest five cents using the following method:”
All Alabama businesses accepting in-person cash payments should audit point-of-sale systems and cash-handling procedures against the Act 2026-548 rounding method before April 17, 2026. Mixed-payment transactions require rounding only on the cash portion—non-cash components must be handled separately under existing payment-system rules. Government transactions are excluded entirely, so staff training should include clear guidance on the government-entity carve-out.
What changed
Act 2026-548 introduces a mandatory five-tier rounding method for cash transactions: amounts ending in 1-2 round down to zero, 3-4 round up to five, 6-7 round down to five, 8-9 round up to zero, and 0 or 5 remain unchanged. The rounding applies only to the cash portion of mixed-payment transactions and does not alter sales prices, tax amounts, surcharges, or fees. Retailers and businesses accepting cash in Alabama should update point-of-sale systems to implement the new rounding method by the April 17 effective date.
Affected parties include all retailers, merchants, and businesses that accept in-person cash payments in Alabama. Cashiers and point-of-sale system operators should be trained on the five-tier rounding method. Businesses that process both cash and non-cash payments should note that rounding applies only to the cash portion of transactions. Government transactions are explicitly carved out and must still be handled under prior rules.
Archived snapshot
Apr 21, 2026GovPing captured this document from the original source. If the source has since changed or been removed, this is the text as it existed at that time.
Category Notices Related Division Sales and Use
Posted: April 20, 2026 Effective April 17, 2026, Act 2026-548 authorizes the rounding of the total amount of any in-person cash transaction to the nearest five cents using the following method:
- If the final digit of the amount in the transaction is one or two, the final digit must be rounded down to zero.
- If the final digit is three or four, the final digit must be rounded up to five.
- If the final digit is six or seven, the final digit must be rounded down to five.
- If the final digit is eight or nine, the final digit must be rounded up to zero.
- If the final digit is five or zero, the final digit is not rounded.
Does the rounding method alter the sales price?
The rounding method does not alter the sales price, the amount of tax collected, or any other authority providing for the collection of sales tax, or any surcharges, assessments, or fees imposed on the sale. The rounding method may apply to the amount of the transaction or to the amount of change tendered to the purchaser.
Does the rounding method apply to payment methods other than cash?
No, the rounding method does not apply to any transaction if payment is made by a method other than cash, including electronic funds transfer, check, gift card, money order, or credit card. If the transaction is made using both cash and another form of payment, then the rounding method will only apply to the portion of the transaction amount that is paid using cash.
Does the rounding method alter or impact any payment amount authorized?
No, the rounding method does not alter or impact any payment amount authorized, cleared, or settled through any payment system that does not use cash.
Does the rounding method apply to transactions where payment is made to a
governmental entity?
No, the rounding method does not apply to transactions where payment is made to a governmental entity, which is any state or local agency located in the state.
Contact
Sales and Use Tax Division
334-353-7928
Download a pdf of this notice.
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