Alabama (AL) Paycheck Calculator 2026

How Alabama works out the tax on each paycheck

Alabama employers calculate state withholding from Form A-4, the Employee's Withholding Exemption Certificate, not from the federal W-4. The Alabama Department of Revenue says plainly that the federal Form W-4 "is not an acceptable substitute," and an employee who never hands in an A-4 must be withheld at zero exemptions, which is the most expensive setting.

On the A-4 you pick one personal exemption code and list your dependents. Single workers claim "0" or "S" ($1,500). Married workers can claim "M" ($3,000, both spouses' exemptions, so the other spouse claims "0"), "S" for their own exemption only, or "MS" if they will file separately. A single parent who qualifies as head of family claims "H" ($3,000). Each dependent other than your spouse is worth $1,000 at gross income up to $50,000, then $500 up to $100,000 and $300 above that.

You only need a new A-4 when your exemptions or dependents change. Employers must keep the certificates for at least three years, and if a worker claims more exemptions than seems right, the employer is told to send the form to the Withholding Tax Section with a letter.

Worked example: a $60,000 Alabama salary, step by step

Alabama's withholding formula is unusual because your federal income tax withholding is subtracted before the state tax is figured. Here is the official A-4 formula applied to a single worker claiming "S" with no dependents, paid $60,000 a year in 2026.

• That works out to 4.18% of gross pay, even though the top rate is 5%.
• The calculator above shows $2,735 of Alabama tax for the same salary because it uses the maximum standard deduction and does not subtract federal tax. Treat the formula figure as the closer estimate of what your employer will actually withhold.
• If your federal withholding drops (say you claim the federal child tax credit on your W-4), your Alabama withholding rises slightly, because there is less federal tax to deduct.

City occupational license taxes

About two dozen Alabama cities levy an occupational license tax on wages earned in the city, e.g. Birmingham and Bessemer 1%, Gadsden 2%. Most of the state has none. These are separate from the state income tax: the city or county administers them, so the Department of Revenue's withholding booklet tells employers to contact the city directly. On a $60,000 salary, a 1% occupational tax takes $600 a year, or about $23 per bi-weekly check.

Because these taxes are levied by the city where the work is done, two people with the same salary can see different net pay depending on where their workplace sits. Check the deductions line on your pay stub: it is usually labelled with the city's name rather than "state tax".

Working across state lines from Alabama

Alabama's withholding rules are written so that most cross-border workers are not withheld twice on the same wages.

• Alabama resident working in Georgia (or another income-tax state) for an Alabama employer: the employer withholds the other state's tax and is not required to withhold Alabama tax as well. You then claim a credit on your Alabama return.
• Alabama resident working in Florida for an Alabama employer: Alabama tax is withheld, because Florida has no individual income tax.
• Nonresidents working for an Alabama employer: only wages earned in Alabama are subject to Alabama withholding.
• Short trips: Act 2025-334 created a 30-day safe harbor. Out-of-state workers who perform services in Alabama for 30 or fewer days in a calendar year keep paying their home state; from day 31 the wages become taxable and reportable to Alabama.

Pre-tax deductions and special pay

Alabama follows the federal exclusions for most workplace savings plans, so money you put into these is not counted as Alabama wages and is not withheld on:

• Section 125 cafeteria plans (pre-tax health, dental and vision premiums)
• 401(k), SIMPLE 401(k) and 403(b) contributions
• SEP and salary-reduction SEP contributions, SIMPLE IRAs and 457 deferred compensation plans
• Severance: with prior Department approval, up to $50,000 of severance or termination pay received because of administrative downsizing can be exempt from Alabama income tax.

Common Alabama paycheck mistakes

These come up again and again on Alabama pay stubs:

• Giving payroll only a federal W-4. Without an A-4 you are withheld at zero exemptions, which costs a single filer roughly the tax on the lost exemption every year until you fix it.
• Both spouses claiming "M". Only one spouse can claim both exemptions; the other must claim "0", or the household will be under-withheld.