Alabama

Sales Tax

  • Statewide: 4.0%
  • Counties/municipalities can levy sales tax of no more than 8.5%.
  • Current average sales tax (with local taxes included): 9.074%
  • Common Exceptions at State Level:
    • Prescription Medicine: Exempt
  • Gasoline Tax: 49.71 cents/gallon (Includes all state, local, and federal taxes)
  • Diesel Fuel Tax: 56.55 cents/gallon (Includes all state, local and federal taxes)

 

Personal Income Tax

  • Personal Income Tax Rate Range: 2% ($0 to $500 taxable income)/4% ($500-$3,000)/5% (on income over $3,000)
  • Standard deduction: Single filing Status: $2,500/Married Filing Jointly: $7,500. Decreases as income rises but no less than $2,000 and $4,000, respectively.
  • Personal Exemption Allowance: $1,500
  • Dependent Exemption: $1,000 if Adjusted Gross Income is less than $20,000/$500 for AGI $20,001 to $100,000/$300 if over $100,000.
  • Itemized Deductions Allowed?: Yes, subject to limitations.
  • Retirement Income
    • Social Security: Exempt
    • IRAs: Exempt with some exceptions.
    • 401Ks/Defined contribution employer retirement plans: Exempt with some exceptions.
    • Private pensions: Exempt with some exceptions.
    • Public Pensions: Exempt with some exceptions.
  • Military Pay
    • Active Duty Pay: Taxable to the extent included in federal AGI
    • Military Retirement Pay: Exempt
    • Military Disability Pay: Exempt
    • VA Disability Dependency & Indemnity Compensation Benefits: Exempt
    • SBP/SSBP/RCSBP/RSFPP: Exempt
Income tax comments: State allows county- and city-level income tax (example: Birmingham has a 1% income tax). Part or all of federal income tax deductible.

 

Property Tax

  • Statewide property tax rate: Limited to $6.50 for every $1,000 of assessed value.
  • Local municipalities (including the state property tax) average .41% of the property's assessed value.
  • Calculation of assessed value: 10% of fair market value.
  • Relief programs for:
    • Owner-occupied: May be eligible for up to $4,000 exemption of assessed value for state-level taxes and up to $2,000 for county.
    • 65 and over: Exempt from all state-level property taxes if income less than $12,000 and $5,000 of assessed value exempt at the county level. If income under $7,500, exempt from all property taxes. If income over $12,000, exempt from all state-level property taxes and $5,000 of assessed value exempt at the county level.
    • All totally and permanently disabled: Exempt from all property taxes.
    • Veteran/Surviving Spouse (unmarried): Exempt
    • May be eligible for additional local exemptions based on income.
  • Personal Property Tax: None

 

Inheritance & Estate Taxes: None

 

Department of Revenue website: www.revenue.alabama.gov

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