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Alabama Tax Guide: Rates, Brackets & Filing Tips

Everything you need to know about Alabama state income tax, sales tax, and property tax obligations for the 2025 tax year.

5.0%
Top Income Tax Rate
9.24%
Combined Sales Tax
0.40%
Property Tax Rate
#40
Tax Burden Rank

Tax Overview

Alabama is one of the more tax-friendly states in the Southeast, featuring relatively low income tax rates and modest property taxes compared to the national average. The state uses a progressive income tax system with three brackets, topping out at just 5%, which is considerably lower than many other states with graduated income taxes.

Sales tax in Alabama is a different story. The state rate of 4% is supplemented by local sales taxes that can push the combined rate well above 9% in some jurisdictions, making it one of the highest combined sales tax burdens in the country. Alabama is also one of the few states that taxes groceries at the full rate, which disproportionately affects lower-income households.

Property taxes in Alabama are among the lowest in the nation, with an effective rate well below 0.5%. The state also allows taxpayers to deduct their federal income taxes on their state return, a benefit only a handful of states offer. This federal tax deduction can significantly reduce the state tax liability for higher-income residents.

Income Tax

Alabama allows a deduction for federal income taxes paid on the state return, which can significantly lower effective rates.

Income RangeTax Rate
$0 – $5002%
$501 – $3,0004%
$3,001 +5%

Sales Tax

State Rate4.00%
Avg. Local Rate5.24%
Combined Rate9.24%

Property Tax

Effective Rate0.40%
Median Annual Bill$658

Key Deductions in Alabama

  • ✓Federal income tax deduction on state return
  • ✓Standard deduction of $2,500 (single) or $7,500 (married filing jointly)
  • ✓Personal and dependent exemptions
  • ✓Retirement income exclusion for public pensions
  • ✓Mortgage interest and property tax deductions

Filing Information

Filing Deadline: April 15

Tax Authority: Alabama Department of Revenue

Phone: (334) 242-1170

Website: https://revenue.alabama.gov

Frequently Asked Questions

Can I deduct federal taxes on my Alabama return?
Yes, Alabama is one of only a few states that allows you to deduct the full amount of federal income taxes paid on your state tax return. This can substantially reduce your Alabama taxable income.
Does Alabama tax groceries?
Yes, Alabama taxes groceries at the full state sales tax rate of 4%, plus applicable local taxes. There is no reduced rate or exemption for food purchased for home consumption at the state level.
Is retirement income taxed in Alabama?
Public pension income from federal, state, and local government retirement systems is exempt from Alabama income tax. Private pensions and 401(k) distributions are generally taxable, though Social Security benefits are not taxed.
When are Alabama state taxes due?
Alabama state income tax returns are due April 15, matching the federal deadline. If the date falls on a weekend or holiday, the deadline shifts to the next business day. Extensions are available upon request.

Neighboring State Guides

TennesseeGeorgiaFloridaMississippi

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