State Income Tax
State Sales Tax - 4%
Ad Valorem - Residential property is taxed at a rate of 33 mills x 10 precent 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.
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 percent, as opposed to the U.S. average of 9.7 percent. Alabama tax burden per capita was $3,144 as compared to the U.S. average of $4,283. (Source: www.retirementliving.com/RLtaxburdens.html)
A net pay calculator allows you to calculate taxes on income and compare to other locations. Visit www.paycheckcity.com/conpw/netpaycalculator.asp.
Cost of living comparator allows quick cost of living comparisons between communities; four links are provided:
State and local taxes are a significant factor in selecting a retirement location. Alabama is consistently ranked within the bottom 10 percent of states for cost of state and local tax burdens. A ranking of states can be found at www.retirementliving.com/RLtaxburdens.html. Information on specific state taxes and exemptions is provided below.
For frequently asked tax questions visit www.revenue.alabama.gov/incometax/itfaq01.htm.
State sales tax is 4 percent; prescription drugs exempt. The rate can go as high as 12 percent 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 www.revenue.alabama.gov/salestax/sales/.
Sales, Use, Lodgings and Rental Tax Rates Detail Report:
|Tax Type||Rate Type||Rate||Active Date||Action||PJ||Administrator|
|CONSUMERS USE||MFG. MACHINE||0.750%||06-01-2009||AC||N||ALATX|
|SALES TAX||MFG. MACHINE||0.750%||06-01-2009||AC||N||ALATX|
|SALES TAX||W/D FEE||$3.750||06-01-2009||AC||N||ALATX|
|SELLERS USE||MFG. MACHINE||0.750%||6-01-2009||AC||N||ALATX|
|Tax Type||Rate Type||Rate|
|CONSUMERS USE||MFG. MACHING||1.500%|
|LODGINGS TAX||GENERAL (MOUNTAIN LAKES AREA)||5.000%|
|LODGINGS TAX||GENERAL (ALL OTHER AREAS)||4.000%|
|SALES TAX||MFG. MACHINE||1.500%|
|SALES TAX||VENDING (FOOD PRODUCTS)||3.000%|
|SALES TAX||VENDING (ALL OTHER)||4.000%|
|SELLERS USE||MFG. MACHINE||1.500%|
For City/County code explanations, click here.
Action Indicator: NT - New Tax; RC - Rate Change; AC - Agency Change
PJ Indicator: N - No tax levied in the police jurisdiction
Y - Tax levied in the PJ; normal rate is 1/2 the rate in corporate limits
Sales Tax W/D Fee: Automobile Demonstrator Fee - for automobile dealers only
LodgingsTax W/D Fee: No. of Room Nights - for lodging providers only
State tax rates with applicable Code of Alabama 1975 Sections:
|Tax Type||Tax Rate||Code Section|
|Gasoline||$.12 per gallon|
$.04 per gallon
$.16 per gallon
|$.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
|Cottonwood||1 cent||Houston||N||Non-State Adm.|
|Houston County||1 cent||Houston||N||Non-State Adm.|
|Taylor||1 cent||Houston||N||Non-State Adm.|
42.5 cents/pack of 20
53.125 cents/pack of 25
Tax Rate Range: Low - 2%; High - 50%
Income Brackets: *Lowest - $500; Highest - $3,000
Number of Brackets: Three
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
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 Sept. 24, 1975 - Taxed, unless combat incurred. Retired Pay - Based solely on disability: Member on Sept. 24, 1975 - No tax; Not Member on Sept. 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 www.revenue.alabama.gov/incometax/xempt.html.
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., Fifth floor, Dothan, Ala. 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.
There is no inheritance tax and the estate tax is limited to federal estate tax collection.
*For joint returns, the taxes are twice the tax imposed on half the income.