Alabama State taxes the income of its residents with rates of 2 percent, 4 percent and 5 percent. More on Alabama State taxes can be found below:
1) Personal Income Tax
Alabama State taxes its residents at the following rates. For single persons, heads of families and married persons filing separate returns:
- 2% on the first $500 of taxable income
- 4% on taxable income between $501 and $3,000
- 5% on all taxable income over $3,000.
For married persons filing joint returns:
- 2% on the first $1,000 of taxable income
- 4% on taxable income between $1,001 and $6,000
- 5% on all taxable income over $6,000.
File Form 40 by April 15 or the next business day if the 15th falls on a weekend or holiday. The Alabama Department of Revenue is following the federal lead, giving its taxpayers an extra filing day to complete state returns. Individual income tax returns can be downloaded as online forms. Filers have the option of completing an online form in which they can enter data. It will make calculations and compute the amount of tax due. Then, the completed form can be printed and mailed.
2) Sales Tax
Alabama’s Sales and Use Tax Section administers, collects and enforces taxes in 16 different categories. Alabama’s general tax rate is 4 percent on purchases of tangible property. The State of Alabama administers over 200 different city and county sales taxes. The collection of these additional taxes could make some jurisdictions’ overall sales tax rate substantially higher than 4 percent.
3) Personal and Real Property Taxes
The Property Tax Division of the Alabama Department of Revenue supervises and controls the valuation, equalization and assessment of ad valorem taxes of all properties in the state. Additionally, the office provides guidance to the country officials in the performance of their official duties.
A homestead exemption is granted by the state on real property taxes, with a larger exemption available to older or disabled taxpayers. One who wants to apply for homestead exemption may contact either the tax assessor or revenue commissioner of that county. More information is available at the Property Tax Division’s website.
4) Inheritance and Estate Taxes
Alabama estate tax returns, affidavits of estate tax and estate tax waivers are no longer required for estates that belong to owners who died after Dec. 31, 2004. Sept. 30, 2005 was the final reporting date for any 2004 estate tax liabilities.
Other Facts about Alabama State Taxes:
Alabama offers free online filing to its taxpayers. Taxpayers can get additional information from one of the state’s Taxpayer Service Centers. Alabama State Taxes law provides for an annual sales tax holiday that begins at 12:01 a.m. on the first Friday of August and ends at the following Sunday midnight. However, counties and cities may choose whether to participate or not.