Introduced for paying soldiers pensions and widows, the tax currently funds a memorial park for the Confederacy in Mountain Creek, Alabama.
The remainder of the tax, or roughly 99 per cent of it, is allocated for other means, the Associated Press reported. It is the last remaining levy associated with the confederacy.
Bringing attention to the tax this week, two Alabama state senators want to direct funds to memorials in support of black history.
If approved by the Alabama legislature, the confederacy tax will contribute 1 per cent of funds to black history, in addition to the 1 per cent for the confederacy memorial.
Offering reaction to the Alabama bill, a number of Twitter users wrote that “Alabama still collects taxes that support the Confederacy. To this day.”
Another added: “Hold up. It what?”
Bobby Singleton, a Democrat, and Clyde Chambliss, a Republican, are co-sponsors of the bill that will collect $500,000 (£362,000) a year for both the confederacy and black history.
“It is imperative that we remember all of our history and learn from both the good and the bad,” Mr Chambliss told the Associated Press.
“I will continue working with all that want to share my love of history, to protect, enhance and restore symbols that will help us avoid the mistakes of the past and move our state forward in a positive direction.”
It follows the toppling of confederate statues and monuments in a number of southern US states in 2020, in demonstrations that irked many Republicans and officials.
Calls for the statues to be removed were part of a reckoning with race and the death of George Floyd, an unarmed black man, in the custody of Minneapolis police in May of last year.