tax

Alabama



Alabama collects a state income tax, with rates of 2 percent, 4 percent and 5 percent. In addition to a state sales tax, counties and cities are allowed to collect taxes on purchases made in their jurisdictions. More on Alabama taxes can be found in the tabbed pages below.

Income
Sales
Property
Estate
Other
Personal income tax
 Alabama collects income taxes from its residents at the following rates.

For single persons, heads of families and married persons filing separate returns:
-- 2 percent on the first $500 of taxable income
-- 4 percent on taxable income between $501 and $3,000
-- 5 percent on all taxable income over $3,000.

For married persons filing joint returns:
-- 2 percent on the first $1,000 of taxable income
-- 4 percent on taxable income between $1,001 and $6,000
-- 5 percent on all taxable income over $6,000.
 Depending on a taxpayer's adjusted gross income and filing status, some Alabama residents see their standard deduction amount increase up to $7,500. The standard deduction remains at $2,000 or $4,000 for other taxpayers whose incomes exceed certain income thresholds. Details on the change can be found in the Standard Deduction Chart.
 Similarly, the dependent exemption has been increased for some taxpayers up to a maximum of $1,000 per dependent, depending upon the adjusted gross income of the taxpayer. The dependent exemption remains at $300 per dependent for other taxpayers whose incomes exceed certain income thresholds.
 File Form 40 by April 15 or the next business day if the 15th falls on a weekend or holiday.
Individual income tax returns can be downloaded as online forms. Filers have the option of completing an online form in which they can enter data. It will make calculations and compute the amount of tax due. The taxpayer can then print the completed form, sign it and mail it.
 All Alabama taxpayers can e-file their returns and some might be able to e-file for free at the Revenue Department's online filing page.
Sales tax
 Alabama's Sales and Use Tax Section administers, collects and enforces taxes in 16 different categories.
 Alabama's general tax rate is 4 percent on purchases of tangible property.
The State of Alabama administers more than 200 different city and county sales taxes. The collection of these additional taxes could make some jurisdictions' overall sales tax rate substantially higher than 4 percent.
 Search the Alabama Department of Revenue's online database of cities and counties that levy sales, use, lodgings and rental taxes to find your local rates. This page maintains updates of tax rate changes.
Personal and real property taxes
 The Property Tax Division of the Alabama Department of Revenue supervises and controls the valuation, equalization and assessment of ad valorem taxes of all property in the state. Additionally, the office provides guidance to the county officials in the performance of their official duties.
 Click here for a list of exemptions to ad valorem tax collection.
Each county has its own millage rate that is used when determining property taxes. Some cities also assess separate property taxes.
 A homestead exemption is granted by the state on real property taxes, with a larger exemption available to older or disabled taxpayers. Click here to view the state's homestead summary chart. To apply for an exemption, contact either the tax assessor or revenue commissioner in your county of residence.
More information is available at the Property Tax Division's Web site.
Inheritance and estate taxes
Alabama estate tax returns, affidavits of estate tax and estate tax waivers are no longer required for estates whose owners died after Dec. 31, 2004. If no filing extensions were granted, Sept. 30, 2005 was the final reporting date for any 2004 estate tax liabilities. Call (334) 242-1000 for details about Alabama's estate tax requirements.
Other Alabama tax facts
Alabama offers to its taxpayers free online filing.
Alabama taxpayers can get additional information and help at one of the state's Taxpayer Service Centers.
Alabama law provides for an annual sales tax holiday that begins at 12:01 a.m. on the first Friday in August and ends at midnight the following Sunday. Counties and cities may choose whether to participate, as noted on this Web page.
For more information, contact the Alabama Department of Revenue at (334) 242-1170.
To download tax forms on this site, you will need to install a free copy of Adobe Acrobat Reader. Click here for instructions.
  

-- Updated: Feb. 4, 2008

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