Alabama Income Tax Calculator 2026

How Alabama income tax is calculated on your return

Alabama taxes taxable income at 2%, 4% and 5%, and the 5% rate starts so low ($3,000 single, $6,000 joint) that it is effectively a flat 5% tax with a small discount. The lower brackets are worth at most $40 to a single filer and $80 to a married couple.

What really drives your Alabama bill is how much income is removed before those rates apply. Alabama starts from your total income, then subtracts:

• the Alabama standard deduction (or itemized deductions), which shrinks as income rises;
• the federal income tax you actually paid for the year, a deduction guaranteed by Amendment 225 to the Alabama Constitution since 1965;
• a personal exemption of $1,500 (single or married filing separately) or $3,000 (married filing jointly or head of family);
• a dependent exemption of $1,000, $500 or $300 per dependent, depending on income.

Standard deduction ranges by filing status

Alabama phases its standard deduction down between about $26,000 and $35,500 of gross income. Most full-time earners therefore get the minimum amount, not the headline figure.

Worked example: a married couple with two children

Take a married couple filing jointly with $90,000 of wages and two children in 2026. Their federal income tax comes to about $2,040 after the child tax credit. On the Alabama return they subtract the $5,000 minimum standard deduction, that $2,040 of federal tax, the $3,000 personal exemption and two $500 dependent exemptions (their income is between $50,000 and $100,000).

That leaves $78,960 of Alabama taxable income and a tax of $3,868, an effective rate of 4.30% on their wages. Without the federal tax deduction they would owe about $3,970, so the deduction saves them $102. Our calculator does not model this deduction, so its Alabama figure will run a little high for most filers.

Retirement income Alabama does not tax

Alabama is one of the friendlier states for retirees because several large categories of retirement income are fully exempt:

• Social Security benefits.
• Pensions from the Teachers' Retirement System, the Employees' Retirement System and the Judicial Retirement System of Alabama, and military retirement pay.
• Payments from any "defined benefit" plan (a traditional pension, public or private), to the extent they would be federally taxable.
• Up to $6,000 of other taxable retirement income (for example IRA or 401(k) withdrawals) for each spouse who is 65 or older, claimed on Schedule RS.

Which Alabama return to file, and when

Full-year residents and part-year residents file Form 40 (or the shorter 40A if they qualify); part-year residents report only the income earned while living in Alabama. Nonresidents with Alabama-source income file Form 40NR. The Alabama return is due on the same date as your federal return, which for 2026 income is April 15, 2027.

For 2025 returns, full-year residents had to file once gross income reached $4,500 (single), $8,200 (head of family), $5,750 (married filing separately) or $11,500 (married filing jointly). Residency is based on domicile: your permanent home, which continues until you move and intend to stay elsewhere. Alabamians who were residents when they entered the military remain Alabama residents for tax purposes until they prove a change of home of record.