Alabama Tax Guide
5%top marginal rate
Alabama has a progressive income tax with a relatively low top rate of 5%. Its state sales tax rate of 4% is moderate, but local jurisdictions can add significantly. Alabama boasts some of the lowest property taxes in the nation, making it attractive for homeowners.
Alabama Tax at a Glance
Income Tax
5%
Top marginal rate
Sales Tax
4%
State-level rate
Property Tax
0.41%
63% below the national average
Estate Tax
No
No state estate tax
How Alabama Compares to the National Average
Notable Tax Facts
- One of the lowest effective property tax rates in the country at ~0.41%
- Local sales taxes can push combined rates above 10% in some areas
- Alabama allows a full deduction for federal income taxes paid on state returns
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Alabama Tax FAQ
What is Alabama's income tax rate?
Alabama has a progressive income tax with rates ranging from 2% to 5%. The top rate of 5% applies to taxable income over $3,000 for single filers.
Does Alabama have a sales tax?
Yes, Alabama has a 4% state sales tax. Local governments can add additional sales tax, with combined rates exceeding 10% in some jurisdictions.
Is Alabama a good state for low taxes?
Alabama has very low property taxes and a moderate income tax rate. However, high combined sales tax rates in some areas offset some of those savings.
Does Alabama tax retirement income?
Alabama does not tax Social Security benefits. Pension income from defined benefit plans is also generally exempt from state income tax.
Compare With Other States
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Read moreEducational content, not tax advice. Tax rates are approximate and subject to change. Consult a qualified CPA or tax professional for advice specific to your situation. Data reflects widely-known public information as of early 2026.