Alabama State Taxes: A Simple Guide

🏈Alabama state income tax

Alabama taxes personal income under its own rules, separate from the federal system. In general:

• •Residents over certain income thresholds usually must file an Alabama income tax return.
• •Nonresidents may need to file if they earn Alabama-source income.
• •Alabama's definitions of income, deductions, and credits are not identical to federal rules.

A typical resident files a federal Form 1040 plus a separate Alabama state return for the same tax year if they meet filing requirements.

🛒Sales and use tax

Alabama has a state sales tax, and cities and counties often add their own local sales taxes on top. As a result, the total rate varies by location.

• •Many retail sales of goods are taxable.
• •Some categories, like certain groceries or medicines, may be exempt or taxed differently.
• •If you buy taxable goods from out of state or online without tax, you may owe use tax to Alabama.

Businesses selling taxable goods or services generally must collect and remit state and local sales tax where required.

🏡Property taxes

Property taxes in Alabama are mainly set and collected by counties and local governments, based on the assessed value of real property such as homes and land.

• •Homeowners receive property tax bills from local authorities.
• •Property tax rates and classifications differ by county and type of property.
• •Some taxpayers may qualify for exemptions or special treatment for a primary residence or age-based relief.

🔗Putting Alabama taxes together

A typical Alabama resident may see several kinds of tax each year:

• •Federal income tax (Form 1040)
• •Alabama state income tax
• •State and local sales and use taxes
• •Local property taxes if they own a home

Understanding core ideas like taxable income and how to file your taxes makes it easier to see how Alabama's rules fit on top of the federal system.