State Income Tax
State Sales Tax - 4%
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.
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.
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.
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:
|Tax Type||Rate Type||Rate||Active Date||Action||PJ||Administrator|
|CONSUMERS USE||MFG. MACHINE||.750%||06-01-2009||AC||N||ALATX|
|SALES TAX||MFG. MACHINE||.750%||06-01-2009||AC||N||ALATX|
|SALES TAX||W/D FEE||$3.750||06-01-2009||AC||N||ALATX|
|SELLERS USE||MFG. MACHINE||.750%||6-01-2009||AC||N||ALATX|
|Tax Type||Rate Type||Rate|
|CONSUMERS USE||MFG. MACHING||1.500%|
|LODGINGS TAX||GENERAL (MOUNTAIN LAKES AREA)||5.000%|
|LODGINGS TAX||GENERAL (ALL OTHER AREAS)||4.000%|
|SALES TAX||MFG. MACHINE||1.500%|
|SALES TAX||VENDING (FOOD PRODUCTS)||3.000%|
|SALES TAX||VENDING (ALL OTHER)||4.000%|
|SELLERS USE||MFG. MACHINE||1.500%|
For City/County code explanations, Click Here
Action Indicator: NT - New Tax; RC - Rate Change; AC - Agency Change
PJ Indicator: N - No tax levied in the police jurisdiction
Y - Tax levied in the PJ; normal rate is 1/2 the rate in corporate limits
Sales Tax W/D Fee: Automobile Demonstrator Fee - for automobile dealers only
LodgingsTax W/D Fee: No. of Room Nights - for lodging providers only
Source: Alabama Department of Revenue
State tax rates with applicable Code of Alabama 1975 Sections
|TAX TYPE||TAX RATE||CODE SECTION|
|Gasoline||$.12 per gallon
$.04 per gallon
$.16 per gallon
|Motor Fuels||$.13 per gallon
$.06 per gallon
$.19 per gallon
|$.010 per gallon
$.030 per gallon
|Lubricating Oil||$.02 per gallon
$.04 per gallon
$.06 per gallon
|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.
|Motor Carrier Mileage||
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
Houston County Fuel Taxes:
|Cottonwood||1 cent||Houston||N||Non-State Adm.|
|Houston County||1 cent||Houston||N||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
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.