Alabama State Tax Guide
State tax rates and rules for income, sales, property, fuel, cigarette, and other taxes that impact Alabama residents.
- (opens in new tab)
- (opens in new tab)
- (opens in new tab)
- Newsletter sign up Newsletter
Bottom Line
Middle-Class Families: Mixed (Go to the Kiplinger Tax Map for Middle-Class Families (opens in new tab))
Retirees: Tax-Friendly (Go to the Kiplinger Tax Map for Retirees (opens in new tab))
If you're a college football fan, perhaps you've thought about moving to Alabama. But there are also non-football reasons for relocating to the Yellowhammer State — like relatively low taxes for many residents. While most people end up paying the highest income tax rate, it's not too bad at only 5%. Alabama also boasts the second-lowest median property tax rate in the country.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
But Alabama fumbles when it comes to sales taxes. At 4%, the state rate is low, but some local governments tack on up to 7.5% in additional sales taxes. As a result, the state-wide average combined (state and local) sales tax rate is 9.24%, which is the fifth-highest in the nation.
Alabama Income Taxes
Alabama 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.
Alabama Taxation of Social Security Benefits
Social Security benefits are not taxed by the state.
Alabama Tax Breaks for Other Retirement Income
Income from federal government, designated Alabama state and local government, and military retirement plans is exempt.
In addition, payments from traditional pension plans (i.e., defined benefit plans) are exempt, whether they are from private sector or out-of-state government plans.
Beginning in 2023, the first $6,000 of retirement income received by anyone 65 years of age or older is exempt.
Railroad Retirement benefits are also exempt.
Alabama Sales Tax
4% state levy. Localities can add as much as 7.5% to that, and the average combined rate is 9.24%, according to the Tax Foundation.
- Groceries: Taxable
- Clothing: Taxable
- Motor Vehicles: Taxable (2% state rate; additional local taxes may apply)
- Prescription Drugs: Exempt
Alabama Real Property Taxes
In Alabama, the median property tax rate is $390 per $100,000 of assessed home value.
Alabama Property Tax Breaks for Retirees
All homeowners 65 or older are exempt from the state portion of property taxes. Taxpayers age 65 and older with net taxable income of $12,000 or less on their combined (taxpayer and spouse) federal income tax return are exempt from all property taxes on their principal residence.
Alabama Motor Fuel Taxes
Gasoline: 31.31¢ per gallon.
Diesel: 32.25¢ per gallon.
Alabama 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 (the liquor tax is an estimate by the Distilled Spirits Council of the United States and published by the Tax Foundation)
Alabama Estate and Inheritance Taxes
No estate or inheritance tax.
Rocky was a Senior Tax Editor for Kiplinger from October 2018 to January 2023. He has more than 20 years of experience covering federal and state tax developments. Before coming to Kiplinger, he worked for Wolters Kluwer Tax & Accounting and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today, Forbes, U.S. News & World Report, Reuters, Accounting Today, and other media outlets. Rocky has a law degree from the University of Connecticut and a B.A. in History from Salisbury University.
-
-
Can the Earned Income Tax Credit Help You? (Or Someone You Know)?
The IRS and community partners want to improve earned income tax credit awareness.
By Kelley R. Taylor • Published
-
Financial Wellness Is Self-Care: 3 Steps to Help Improve Your Financial Well-Being
Many people resolve in the new year to get healthier. Taking charge of your financial wellness can help improve your physical health by lowering your anxiety about money issues.
By Kara Duckworth, CFP®, CDFA® • Published
-
Can the Earned Income Tax Credit Help You? (Or Someone You Know)?
The IRS and community partners want to improve earned income tax credit awareness.
By Kelley R. Taylor • Published
-
Tax Season is Here. What to Know Before You File
The IRS is accepting tax returns for the 2023 tax season, but there are some key things to know before you file.
By Kelley R. Taylor • Published
-
When Can You File Taxes in 2023?
tax filing If you're an early bird when it comes to filing your tax return, there's good news from the IRS.
By Rocky Mengle • Published
-
New EV Tax Credit Gets Complicated for 2023
More car models qualify for the full federal electric vehicle tax credit for a little while, but then what?
By Kelley R. Taylor • Published
-
When Are Taxes Due in 2023? Tax Deadlines by Month
tax deadline Know the tax deadlines that apply to you, so you don't get hit with IRS penalties or miss out on a valuable tax break.
By Rocky Mengle • Published
-
State "Stimulus Checks" in 2023 – Which States Are Still Sending Payments
Residents in a handful of states could still receive a tax rebate check or other payment in 2023.
By Rocky Mengle • Last updated
-
What's the Gift Tax Exclusion for 2023?
Plan on giving cash or property to family or friends? Keeping it below the annual gift tax exemption can help you save both time and money.
By Rocky Mengle • Published
-
Top Tax Stories of 2022 (That Still Matter for 2023)
Kiplinger highlights some of its top tax stories of 2022 about topics that can still impact your finances in 2023.
By Kelley R. Taylor • Published