Find out exactly how much Alabama state income tax you owe — with federal deduction, standard deduction phase-out, and local occupational tax all accounted for.
Alabama's income tax system has three brackets and several deductions that work differently from other states. Understanding each piece helps you plan and avoid surprises at tax time.
| Filing Status | Taxable Income | Rate |
|---|---|---|
| Single | $0 – $500 | 2% |
| Single | $501 – $3,000 | 4% |
| Single | Over $3,000 | 5% |
| Married Filing Jointly | $0 – $1,000 | 2% |
| Married Filing Jointly | $1,001 – $6,000 | 4% |
| Married Filing Jointly | Over $6,000 | 5% |
| Head of Household | $0 – $500 | 2% |
| Head of Household | $501 – $3,000 | 4% |
| Head of Household | Over $3,000 | 5% |
| Married Filing Separately | $0 – $500 | 2% |
| Married Filing Separately | $501 – $3,000 | 4% |
| Married Filing Separately | Over $3,000 | 5% |
Alabama is one of only a handful of states that lets you deduct the federal income taxes you paid from your state taxable income. For a single filer earning $65,000 who paid roughly $8,500 in federal taxes, Alabama subtracts that $8,500 before applying its brackets — reducing Alabama taxable income by $8,500. At the 5% top rate, that's a $425 savings in Alabama tax.
This makes Alabama's effective state tax rate significantly lower than the headline 5% for most earners — typically 3.5%–4.2% for middle-income filers.
| Filing Status | Standard Deduction | Personal Exemption | Phase-out Starts |
|---|---|---|---|
| Single | $2,500 | $1,500 | $23,000 AGI |
| Married Filing Jointly | $7,500 | $3,000 | $23,000 AGI |
| Head of Household | $4,700 | $3,000 | $23,000 AGI |
| Married Filing Separately | $3,750 | $1,500 | $23,000 AGI |
| Dependent exemption | $1,000 per dependent | — | |
| State | Top Rate | Structure | Notes |
|---|---|---|---|
| Alabama | 5% | 3 brackets | Fed tax deductible; low effective rate |
| Tennessee | 0% | No income tax | — |
| Florida | 0% | No income tax | — |
| Mississippi | 4.7% | Flat (dropping) | Heading to 4% flat by 2026 |
| Georgia | 5.49% | Flat | Higher than Alabama |
Sales tax: Alabama's state sales tax is 4%. Combined with county and city rates, the total can reach 11.5% in some areas. Jefferson County adds 1%, and some cities add their own rates on top. Use our Alabama Sales Tax Calculator to find the combined rate for your location.
Capital gains: Alabama taxes capital gains as ordinary income — the same 2%–5% rates apply. Unlike the federal system, there's no lower rate for long-term gains.
Property tax: Alabama has the second-lowest effective property tax rate in the US at approximately 0.41%. Residential property is assessed at 10% of market value, making the effective bill far lower than the nominal millage rate suggests.