Alabama Tax Return

If you live in Alabama you will be taxed at the following rates:

If you file Single, Head of Household or Married Filing Separately, you will be taxed at a rate of 2% on the first $500 of income, 4% on income between $501 and $3,000 and 5% on all taxable income over $3,000.

If you file with the status of Married Filing Jointly the rates are adjusted to, 2% on the first $1,000, 4% on income between $1,001 and $6,000 and 5% on all taxable income over $6,000.

The state of Alabama does not tax Social Security Benefits.

Qualified pension plans, including; Military, Civil-Service, State and Local government are exempt from state taxes. Defined out of state pension plans are also tax exempt. If you receive a distribution from an IRA, 401(k), 403(b) or employer based pension plan that income is taxable.

If you keep a domicile in Alabama you are subject to tax on any income earned with-in or outside of Alabama, there are certain exclusions and exemptions that are provided under Alabama's tax law.

A domicile is considered a fixed place of habitation, while a residence is a temporary place of lodging. To be recognized as a domicile it must be where you return to from being absent, where you keep a permanent home and standard establishment.

You may only have one domicile; to establish a new domicile you must first abandon the old one. The original domicile continues until a new one can be established.