Taxes

Sales Taxes		State Income Tax
State Sales Tax - 4% City Sales Tax - 4% County Sales Tax - 1% Total Sales Tax - 9%		Married/File Joint First $1,000 - 2% Next $5,000 - 4% Over $6,000 - 5%		Single/Head Household First $500 - 2% Next $2,500 - 4% Over $3,000 - 5%

Ad Valorem - Residential property is taxed at a rate of 33 mills x 10% of assessed value. There is a homestead exemption for totally disabled persons or persons over 65 years of age with $7,500 or less income if they live on the property. Other exemptions are based on individual situations. Income from specified Alabama Retirement Systems, the United States Civil Service Retirement System, Military Retirement Systems and benefits received under a "defined benefit plan," as defined under Section 414(j) of the Internal Revenue Code, are exempt from Alabama income tax.

Alabama Cost of Living And Taxes:

How far your retirement money can go is dependent on two things, the local cost of living, which normally does not address taxes, and state and local taxes. This site provides information and links to assist in your retirement location decision making process.

In 2008, Alabama ranked 46th in a ranking of states by "effective state and local tax burdens." Alabama's tax burden as a percentage of income was 8.6%, as opposed to the U.S. average of 9.7%. Alabama tax burden per capita was $3,144 as compared to the U.S. average of $4,283. Source: RetirementLiving.com

A net pay calculator allows you to calculate taxes on income and compare to other locations. Visit PayCheckCity.com.

A cost of living comparator allows quick cost of living comparisons between communities; four links are provided:

1. ACCRA Cost of Living Calculator
2. Bankrate.com (uses current ACCRA data)
3. RelocationEssentials.com
4. CNN Money.com

Taxes:

State and local taxes are a significant factor in selecting a retirement location. Alabama is consistently ranked within the bottom 10% of states for cost of state and local tax burdens. A ranking of states can be found at RetirementLiving.com. Information on specific state taxes and exemptions is provided below.

For frequently asked tax questions, visit Alabama Department of Revenue.

Sales Taxes:

State sales tax is 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. To view city or county sales, use, lodging or rental taxes, go to Alabama Department of Revenue.

Sales, Use, Lodgings and Rental Tax Rates Detail Report:

City: Dothan
Locality Code: 9653
County Location: Houston County

Current Tax Rates as of the June 1, 2009:

Tax Type

Rate Type

Rate

Active Date

Action

Administrator

CONSUMERS USE

AUTO

.750%

06-01-2009

ALATX

CONSUMERS USE

FARM

.750%

06-01-2009

ALATX

CONSUMERS USE

GENERAL

4.000%

06-01-2009

ALATX

CONSUMERS USE

MFG. MACHINE

.750%

06-01-2009

ALATX

LODGINGS

GENERAL

6.000%

06-01-2009

ALATX

SALES TAX

AUTO

.750%

06-01-2009

ALATX

SALES TAX

FARM

.750%

06-01-2009

ALATX

SALES TAX

GENERAL

4.000%

06-01-2009

ALATX

SALES TAX

MFG. MACHINE

.750%

06-01-2009

ALATX

SALES TAX

VENDING

3.000%

06-01-2009

ALATX

SALES TAX

W/D FEE

$3.750

06-01-2009

ALATX

SELLERS USE

AUTO

.750%

6-01-2009

ALATX

SELLERS USE

FARM

.750%

6-01-2009

ALATX

SELLERS USE

GENERAL

4.000%

6-01-2009

ALATX

SELLERS USE

MFG. MACHINE

.750%

6-01-2009

ALATX

State Tax Rates:

Tax Type

Rate Type

Rate

CONSUMERS USE

AUTO

2.000%

CONSUMERS USE

FARM

1.500%

CONSUMERS USE

GENERAL

4.000%

CONSUMERS USE

MFG. MACHING

1.500%

LODGINGS TAX

GENERAL (MOUNTAIN LAKES AREA)

5.000%

LODGINGS TAX

GENERAL (ALL OTHER AREAS)

4.000%

RENTAL TAX

AUTO

1.500%

RENTAL TAX

LINENS/GARMENTS

2.000%

RENTAL TAX

GENERAL

4.000%

SALES TAX

AUTO

2.000%

SALES TAX

FARM

1.500%

SALES TAX

GENERAL

4.000%

SALES TAX

MFG. MACHINE

1.500%

SALES TAX

VENDING (FOOD PRODUCTS)

3.000%

SALES TAX

VENDING (ALL OTHER)

4.000%

SELLERS USE

AUTO

2.000%

SELLERS USE

FARM

1.500%

SELLERS USE

GENERAL

4.000%

SELLERS USE

MFG. MACHINE

1.500%

Code Explanations:

For City/County code explanations, Click Here

Action Indicator: NT - New Tax; RC - Rate Change; AC - Agency Change

PJ Indicator: N - No tax levied in the police jurisdiction
Y - Tax levied in the PJ; normal rate is 1/2 the rate in corporate limits

Sales Tax W/D Fee: Automobile Demonstrator Fee - for automobile dealers only

LodgingsTax W/D Fee: No. of Room Nights - for lodging providers only

Source: Alabama Department of Revenue

Motor Fuels Tax:

State tax rates with applicable Code of Alabama 1975 Sections

TAX TYPE	TAX RATE	CODE SECTION
Gasoline	$.12 per gallon $.04 per gallon $.16 per gallon	40-17-31 40-17-220
Motor Fuels	$.13 per gallon $.06 per gallon $.19 per gallon	40-17-2 40-17-220
Aviation Gas Jet Fuel	$.010 per gallon $.030 per gallon	40-17-31(d)
Lubricating Oil	$.02 per gallon $.04 per gallon $.06 per gallon	40-17-171 40-17-220

Wholesale Oil License	1/2 of 1% on gross sales for the preceding fiscal year* *NOTE: This is levied on the first wholesale transaction in Alabama.	40-17-174
Motor Carrier Mileage	Seating Capacity Tax Rate 40-19-3 Not less than nine (9) nor more than 16 Seventeen (17) thru Twenty-one (21) Twenty-two (22) thru Twenty-five (25) Greater than Twenty-five (25)	$.025 per mile $.005 per mile $.075 per mile $. 01 per mile

Source: RetirementLiving.com

Houston County Fuel Taxes:

LOCALITY

GASOLINE RATE

COUNTY

ADMINISTRATOR

Cottonwood

1 cent

Houston

Non-State Adm.

Houston County

1 cent

Houston

Non-State Adm.

Taylor

1cent

Houston

Non-State Adm.

State Cigarette Tax:

42.5 cents/pack of 20

53.125 cents/pack of 25

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 - $300

Standard Deduction: Single - $2,000; Married filing joint return - $4,000

Medical/Dental Deduction: Limited to excess of 4% of adjusted gross income

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: Disability Portion - Length of Service Pay; Member on September 24, 1975 - No tax; Not Member on September 24, 1975 - Taxed, unless combat incurred. Retired Pay - Based solely on disability: Member on September 24, 1975 - No tax; Not Member on September 24, 1975 - Taxed, unless all pay based on disability and disability resulted from armed conflict, extra-hazardous service, simulated war, or an instrumentality of war.

VA Disability Dependency and Indemnity Compensation: 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.

An extensive list of exemptions are provided at Alabama Department of Revenue

Property Taxes:

Houston County collects 33 mills on property within a municipality and 28 mills for property in the rural area of Houston County. Homeowners can claim a homestead exemption at the Houston County Revenue Commissioner's office located at 462 N. Oats St., 5h floor, Dothan, AL. For additional information on homestead exemptions, maps of parcels in Houston County and other tax questions, call (334) 677-4714 or visit www.houstoncounty.org.

Each county has its own millage rate.

Inheritance and Estate Taxes:

There is no inheritance tax and the estate tax is limited to federal estate tax collection.

For further information, visit the Alabama Department of Revenue or call (334) 242-1170. If you are thinking about retiring to Alabama, click here.

*For joint returns, the taxes are twice the tax imposed on half the income.

Source: RetirementLiving.com