Estimate your take-home pay in Alabama. The state levies a graduated income tax that tops out at 5% (2% to 5% across 3 brackets). This means a portion of every paycheck goes toward state income tax in addition to federal withholding, Social Security, and Medicare.
Disclaimer: All figures on this page are estimates for general informational purposes only and are not financial, tax, or legal advice. Tax rates, brackets, and withholding rules change and vary by locality and personal circumstances. Verify current rates with the Alabama Department of Revenue or the IRS, and consult a qualified tax professional before making financial decisions.
Alabama Tax Snapshot
- State Income Tax
- 5% top rate
- Sales Tax (state + local avg)
- 9.24%
- Avg Property Tax Rate
- 0.4%
- Median Home Value
- $179,500
- State Minimum Wage
- $7.25/hr
Did You Know?
Alabama allows a full deduction of federal income taxes paid on state returns.
How Alabama's Graduated Brackets Affect Your Paycheck
When you earn a paycheck in Alabama, your employer withholds federal income tax, Social Security (6.2%), and Medicare (1.45%). On top of that, the state withholds income tax based on 2% to 5% across 3 brackets. The state minimum wage is $7.25 per hour, which sets the floor for hourly workers. Understanding these deductions helps you budget effectively and plan for the average 0.4% property tax rate on homes valued around $179,500.
Alabama also levies a combined state and average local sales tax of 9.24%, which affects your overall purchasing power. Factor this into your budget when calculating how far your paycheck stretches.
How Alabama's Income Tax Compares Nationally
Alabama uses a graduated income tax — 2% to 5% across 3 brackets — so higher slices of income are taxed at higher rates rather than one flat percentage.
Its 5% top rate is the 25th-highest nationally among the 42 states and jurisdictions that tax wages, below the median top rate of 5.54%.
For comparison, nearby states line up like this: Florida (no income tax); Georgia (top rate 5.39%); Mississippi (top rate 4.7%); Tennessee (no income tax).