ALABAMA
Sales Taxes
State Sales Tax: 4% (prescription drugs exempt); The rate can go as high as 12.0% depending on city and county taxes. The state administers over 200 different city and county sales taxes; however, it does not administer all county or city sales taxes. There is a 3% tax on food sold through vending machines; 2% on sales of motor vehicles, mobile homes and motorboats; and 4% on sales of tangible personal property.s
Gasoline Tax: 39.3 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 46.3 cents/gallon (Includes all taxes)
Cigarette Tax: 42.5 cents/pack of 20
Gasoline Tax: 39.3 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 46.3 cents/gallon (Includes all taxes)
Cigarette Tax: 42.5 cents/pack of 20
Personal Income Taxes
Tax Rate Range: Low – 2.0%; High – 5.0%
Income Brackets: *Lowest – $500; Highest – $3,000
Number of Brackets: 3
Personal Exemptions: Single – $1,500; Married – $3,000; Dependents – $500
Standard Deduction: Single – $2,000; Married filing joint return – up to $7,500 based on state AGI and filing status.
Medical/Dental Deduction: Limited to excess of 4% of adjusted gross income. However, you may deduct 50 percent of the premiums you pay for health insurance if you work for an employer that has less than 25 employees.
Federal Income Tax Deduction: Full
Retirement Income Taxes: Social Security, military, civil service, state/local government and qualified private pensions are exempt. All out-of-state government pensions are tax-exempt if they are defined benefit plans.
Retired Military Pay: Pay and survivor benefits not taxed.
Military Disability Retired Pay: Retirees who entered the military before Sept. 24, 1975, and members receiving disability retirements based on combat injuries or who could receive disability payments from the VA are covered by laws giving disability broad exemption from federal income tax. Most military retired pay based on service-related disabilities also is free from federal income tax, but there is no guarantee of total protection.
VA Disability Dependency and Indemnity Compensation: VA benefits are not taxable because they generally are for disabilities and are not subject to federal or state taxes.
Military SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax. Check with state department of revenue office.
Income Brackets: *Lowest – $500; Highest – $3,000
Number of Brackets: 3
Personal Exemptions: Single – $1,500; Married – $3,000; Dependents – $500
Standard Deduction: Single – $2,000; Married filing joint return – up to $7,500 based on state AGI and filing status.
Medical/Dental Deduction: Limited to excess of 4% of adjusted gross income. However, you may deduct 50 percent of the premiums you pay for health insurance if you work for an employer that has less than 25 employees.
Federal Income Tax Deduction: Full
Retirement Income Taxes: Social Security, military, civil service, state/local government and qualified private pensions are exempt. All out-of-state government pensions are tax-exempt if they are defined benefit plans.
Retired Military Pay: Pay and survivor benefits not taxed.
Military Disability Retired Pay: Retirees who entered the military before Sept. 24, 1975, and members receiving disability retirements based on combat injuries or who could receive disability payments from the VA are covered by laws giving disability broad exemption from federal income tax. Most military retired pay based on service-related disabilities also is free from federal income tax, but there is no guarantee of total protection.
VA Disability Dependency and Indemnity Compensation: VA benefits are not taxable because they generally are for disabilities and are not subject to federal or state taxes.
Military SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax. Check with state department of revenue office.
Property Taxes
The state does not collect taxes on personal property such as boats and computers. Its ad valorem (property tax) is 6.5 mills (http://216.226.178.107/Taxincentives/proptaxincentives.html). Each city and county may levy has its own millage rate. For information on all ad valorem tax exemptions, click here.
Homeowners 65 and older are exempt from all state property taxes. Some cities also assess separate property taxes. A homestead exemption up to $5,000 of assessed value is granted by the state on real property taxes. A larger exemption is available to persons over 65. Visit state’s property tax division web site. To view the state’s homestead summary chart, click here.
Taxpayers are allowed to take a deduction on their individual returns for amounts contributed to a catastrophic (hurricanes, floods and storms) savings account. If the qualified deductible is $1,000 or less, the maximum contribution is $2,000. If the qualified deductible is more than $1,000, the maximum contribution is the smaller of (a) $15,000 or (b) twice the qualified deductible.
Inheritance and Estate Taxes
Alabama does not impose a separate state estate or inheritance tax. It has what is known as a “pickup” or “sponge” tax, which means the state collects the maximum credit allowed on the federal estate tax return for “state death taxes.”
For further information, visit the Alabama Department of Revenue site or call 334-242-1512 or 256-837-2319. If you are thinking about retiring to Alabama, click here.
* For joint returns, the taxes are twice the tax imposed on half the income.
* For joint returns, the taxes are twice the tax imposed on half the income.
Today's Tidbit: As the temperatures bounce around between 30 degrees and 70 degrees, try to keep yourself healthy by staying in a particular temperature range. The wide variety of temperature differences has the ability to cause colds and sinus infections by making people more susceptible to them.
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