Information for Alabama State Income Tax

Alabama's income tax rates range from 2 to 5 percent.

Alabama taxes income at a relatively low rate compared with many other states, with the highest income tax rate being 5 percent of gross income. Alabama allows filers to take both a personal exemption and a deduction. Taxpayers may choose between itemizing and taking a standard deduction, the amount of the latter being based on the taxpayer's income. Alabama offers electronic filing on almost all individual taxpayer forms.

Tax Rate

Alabama is forty-eighth in the nation when it comes to the taxes collected per person. The individual income tax rates range from 2 to 5 percent. Individuals pay 2 percent income tax on the first $500 of taxable income, 4 percent on the next $2,500 of taxable income, and 5 percent income tax on all taxable income over $3,000. Similarly, couples filing jointly in Alabama pay 2 percent on the first $1,000 of taxable income, 4 percent on the next $5,000 of taxable income, and 5 percenton all taxable income over $6,000. These were the rates in 2009 and are subject to change if the Department of Revenue so chooses.

Exemptions

Alabama allows for a personal exemption as well as a dependent exemption. The personal exemption gives a base level where you can earn up to that amount without having to pay taxes. For the 2009 tax year, the personal exemption in Alabama was $1,500 per person, and couples filing jointly are entitled to a $3,000 personal exemption. Dependent exemptions ranged from $300 to $1,000 per dependent in 2009. Exemptions are claimed in addition to deductions, whether itemized or standard.

Standard Deductions

Unlike with federal income taxes, Alabama's standard deduction varies from person to person and depends on income. Alabama uses a chart to determine the standard deduction. The standard deduction in 2009 ranged from $2,000 for a single individual to up to $7,500 for a couple filing jointly. For an individual with a gross income of $30,000 or more, he would be entitled to the lowest standard deduction of $2,000. For individuals making up to $20,499, they were entitled to a standard deduction of $7,500 in 2009. Deductions, whether itemized or standard, are claimed in addition to exemptions.

Itemized Deductions

Like the federal government, Alabama allows taxpayers to itemize their deductions as an alternative to taking the standard deduction. This means that the taxpayer lists out their deductible expenses, and does not pay income taxes on the money earned to pay for those items. Common itemized deductions included unreimbursed medical expenses and charitable contributions. Just because you itemize on your federal return does not mean that you have to itemize on your Alabama return.

Electronic Filing

Like the federal government, Alabama allows electronic filing of state tax returns in most cases. Taxpayers who file electronically receive their refunds quicker, usually within two weeks. Almost all individual income tax return forms can be filed online. If you have your return prepared through an accountant, that person should have software which is compatible with electronic filing in Alabama. If you prepared your returns yourself, you can file through the Alabama PC Online Filing System. Check with the Alabama Electronic Filing Program for up-to-date requirements and procedures.

References

• Alabama Department of Revenue: Frequently asked questions about Alabama individual income tax
• Alabama Department of Revenue: 2009 standard deduction chart
• Alabama Department of Revenue: Alabama individual electronic filing
• Alabama Department of Revenue: Alabama PC online filing
• Alabama Department of Revenue: Moving to Alabama

Resources

• Alabama Department of Revenue: Frequently asked questions about Alabama individual income tax