Alabama State Income Tax in 2025: A Guide

Alabama uses a progressive tax system for its state income tax rates, ranging from 2% to 5%. That means your specific state income tax rate depends on your income level and filing status. Other factors, like deductions and credits, can also impact how much you owe. 

Familiarizing yourself with Alabama’s tax structure helps you know what to expect this tax season so that you can maximize your refund or minimize your tax bill.  

Let’s explore what you need to know to confidently tackle your Alabama state income tax return for the 2024 tax year (the taxes you pay in 2025). 

*Note that you are still responsible for federal taxes if you meet the IRS income filing threshold. This article addresses state-specific taxes only.

Alabama state income tax rates

Alabama’s progressive income tax system has three brackets, which range from 2% to 5%. Your rate depends on your filing status and adjusted gross income (AGI). Your AGI is your income from all taxable sources minus deductions, such as student loan interest, retirement contributions, or deductible expenses.  

Alabama’s tax bracket structure ensures higher earners pay a higher percentage of their income in taxes. Alabama state income taxes are due by April 15, 2025, which is also the federal tax deadline. 

How much can you expect to pay in AL state income tax? The following breakdown can help.

Single, head of household, and married filing separately

The following Alabama income tax rates apply to: 

• Single persons with an AGI of $4,000 
• Head of household or family with an AGI of $7,700 
• Married persons filing separately with an AGI of $5,250
  

Taxable Income	Tax Rate
First $500 taxable income	2%
Next $2,500	4%
Amounts over $3,000	5%

Married filing jointly

For married taxpayers filing joint returns with an AGI of $10,500 or more, the rates are: 

Taxable Income	Tax Rate
First $1000 taxable income	2%
Next $5,000	4%
Amounts over $6,000	5%

Source: Alabama Department of Revenue

What is the standard deduction in Alabama?

Alabama’s standard deduction reduces your taxable income and makes it easier to calculate your tax bill. The standard deduction you qualify for depends on your AGI. Here’s the breakdown for 2024: 

• Single: Up to $3,000 
• Married Filing Separately: Up to $4,250 
• Married Filing Jointly: Up to $8,500 
• Head of Family: Up to $5,200 

Source: Alabama Department of Revenue 

Filing your taxes with TurboTax makes it easy to determine the exact standard deduction amount you qualify for. We’ll guide you step by step so you can file with confidence.

Who has to file Alabama state income tax?

You must file an Alabama state income tax return if you live in Alabama and your gross income exceeds the following thresholds: 

• Single: $4,000 
• Married Filing Separately: $5,250 
• Head of Family: $7,700 
• Married Filing Jointly: $10,500 

TurboTax can help you determine whether you need to file a state tax return in Alabama.

How Alabama residency impacts tax filing

Alabama determines tax liability based on two factors: 

• Alabama residency 
• Income earned in Alabama 

The following chart shows how residency impacts what you may owe in Alabama state income tax. 

Residency status	Definition	How Alabama taxes income
Resident	You lived in Alabama for the entire tax year, or Alabama is your permanent home.	You are taxed on all income, including income from other states or countries.
Part-year resident	You lived in Alabama for part of the year and moved in or out of the state.	You are taxed on income earned while living in Alabama and Alabama-sourced income.
Nonresident	You lived outside Alabama but earned income from Alabama sources.	You are taxed only on Alabama-sourced income.

Other income tax considerations in Alabama

Alabama offers unique tax treatments for various income types, which might impact your overall tax liability. 

• Retirement and pension income: Federal, state, and local government pensions, military retirement, and railroad retirement plans are exempt from taxation. 
• Investment income: Capital gains are taxed at the same rate as personal income. 
• Social Security income: Social Security benefits are fully exempt from Alabama state taxes. 
• Military income: Active-duty pay is taxable for Alabama residents. However, military retirement pay, combat zone compensation, and allowances for quarters, subsistence, uniforms, and travel are exempt from Alabama state taxes.
  

Common Alabama state tax credits

Alabama offers a wide range of income tax incentives for businesses and individuals. Here are some of the most important ones to consider: 

Tax credit	Description	Amount
Growing Alabama Credit	Encourages private investment in approved economic development projects that promote job creation and infrastructure growth in Alabama.	Up to 100% of the donated amount, subject to state limits.
Alabama Accountability Act – Scholarship Granting Organization Credit	Provides credits for donations to scholarship-granting organizations.	Up to 100% of donation, limited by tax liability and not to exceed $100,000 per year.
2017 Alabama Historic Rehabilitation Tax Credit	Encourages preservation of historic buildings through certified rehabilitation.	25% of qualified rehabilitation expenses, up to $5 million.

For a more comprehensive list of Alabama’s income tax incentives, visit the Alabama Department of Revenue website.

How to file Alabama state income tax

Alabama’s progressive taxation rate might feel complex, but there’s no need to stress over filing your taxes. TurboTax makes filing your 2024 Alabama state income taxes easy and stress-free. Whether you want to do it yourself with step-by-step guidance or get help from a pro, TurboTax offers expert guidance every step of the way. 

TurboTax can help you file your taxes with every possible deduction and credit so you can keep more of your hard-earned money. Whether you’re a resident, nonresident, or live in Alabama part time, TurboTax simplifies filing your AL state taxes. Need additional help from someone who knows Alabama’s tax laws inside and out? Consult with local tax experts today.