State-by-State Guide to Taxes on Middle-Class Families
Tool | November 2020

Alabama State Tax Guide for Middle-Class Families

State tax rates and rules for income, sales, gas, property, cigarette, and other taxes that impact middle-class families.

Alabama

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The Bottom Line
Flag of Alabama

Tax-Friendly

Alabama is a state of contrasts: Property taxes are the second-lowest in the country, but sales taxes take a huge bite — and the full rate is levied on food.

As for income taxes, more contrasts: It doesn't take much income to find yourself in Alabama's highest tax bracket, but the Yellowhammer State does allow you to deduct your federal income taxes — and your payroll taxes — from your state income.

Income Tax Range

Low: 2% (on up to $1,000 of taxable income for married joint filers and up to $500 for all others)

High: 5% (on more than $6,000 of taxable income for married joint filers and more than $3,000 for all others)

Some Alabama municipalities also impose occupational taxes on salaries and wages.

Sales Tax

4% state levy. Localities can add as much as 7.5% to that, and the average combined rate is 9.22%, according to the Tax Foundation.

Groceries: Taxable
Clothing: Taxable
Motor Vehicles: Taxable (2% state rate; additional local taxes may apply)
Prescription Drugs: Exempt

Real Property Taxes

In Alabama, the median property tax rate is $395 per $100,000 of assessed home value.

Motor Fuel Taxes

Gasoline: 29.21¢ per gallon.
Diesel: 30.15¢ per gallon.

Sin Taxes

Cigarettes: $0.68 per pack; counties can add up to $0.25
Snuff: approximately $0.02 per ounce
Chewing tobacco: approximately $0.02 per ounce
Loose smoking tobacco: $0.04 to $0.06 per ounce
Cigars: $0.04 to $0.40 per 10 cigars (depending on type)

Beer: $1.05 per gallon (includes mandatory $0.52 per gallon local tax)
Wine: $1.96 per gallon
Liquor: $19.11 per gallon
Liquor tax is an estimate by the Distilled Spirits Council of the United States and published by the Tax Foundation.

Annual Car Taxes and Fees

An annual vehicle registration fee and property tax based on the car's value are imposed.

Estate and Inheritance Taxes

No estate or inheritance tax.


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