Alabama

Sales Tax

  • Statewide: 4.0%
  • Counties/municipalities can levy sales tax of no more than 7.5%.
  • Current average sales tax (with local taxes included): 7.996%
  • Common Exceptions at State Level:
    • Prescription Medicine: Exempt
  • Gasoline Tax: 47.61 cents/gallon (Includes all state, local, and federal taxes)
  • Diesel Fuel Tax: 54.55 cents/gallon (Includes all state, local and federal taxes)
  • Cigarette Tax: 67.5 cents/pack of 20

 

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

More Financial Guidance From MOAA 

Premium and Life members can consult our financial staff for education and consumer advice.

 

Looking to get more out of your membership? MOAA has more than 400 chapters around the country. Get involved in your community by finding the one closest to you and joining today!