Alabama tax summary for 2026
| Tax on wages | Graduated brackets |
|---|---|
| Starting point | Federal adjusted gross income |
| Rates (single) | 2% – 5% |
| Standard deduction | Single $3,000 · Married filing jointly $8,500 · Head of household $5,200 · Married filing separately $4,250 Phase-out: Single: reduced by $25 for each $500 (or part of $500) of income over $25,999, but not below $2,500. Married filing jointly: reduced by $175 for each $500 (or part of $500) of income over $25,999, but not below $5,000. Head of household: reduced by $135 for each $500 (or part of $500) of income over $25,999, but not below $2,500. Married filing separately: reduced by $88 for each $250 (or part of $250) of income over $12,999, but not below $2,500. |
| Personal exemption | Single $1,500 · Married filing jointly $3,000 · Head of household $3,000 · Married filing separately $1,500 · per dependent $1,000 — a deduction from income Per dependent: by income: $1,000 at $50,000 or less; $500 over $50,000; $300 over $100,000. |
| Federal income tax deduction | Federal income tax is deductible; no cap. |
| Employee payroll taxes | None |
| Local income taxes | Yes — 1 in our data |
Phase-outs, income tables and recapture use your federal adjusted gross income as the income measure; the state’s own definition of income can differ slightly.
Alabama income tax brackets 2026
Rates apply to Alabama taxable income, after the deductions above.
| Rate | Single: income over | Married filing jointly: income over | Head of household: income over | Married filing separately: income over |
|---|---|---|---|---|
| 2% | $0 | $0 | $0 | $0 |
| 4% | $500 | $1,000 | $500 | $500 |
| 5% | $3,000 | $6,000 | $3,000 | $3,000 |
Local income taxes in Alabama
Birmingham levies a 1% occupational tax on gross wages paid for services performed within city limits. Employers must withhold and remit monthly (or quarterly if monthly withholding averaged <$50/month in prior year). Basis: wages; applies to employees for work performed within Birmingham city limits.
| Jurisdiction | Resident rate | Nonresident rate |
|---|---|---|
| Birmingham | 1% | 1% |
Worked example: $65,000, single, paid biweekly
Computed by the same engine as the calculator, with no pre-tax deductions and no local tax.
| Line | Per paycheck | Annual |
|---|---|---|
| Gross pay | $2,500.00 | $65,000 |
| Federal income tax | $216.15 | $5,620 |
| Social Security | $155.00 | $4,030 |
| Medicare | $36.25 | $943 |
| Alabama income tax | $104.96 | $2,729 |
| Take-home pay | $1,987.63 | $51,679 |
Effective tax rate 20.5%; tax on the next dollar earned 24.6%. Alabama taxable income is $55,380. Adding Birmingham local tax would cost $650 a year.
Second example: $120,000, married filing jointly, two children
Take-home $99,972 a year ($3,845.08 biweekly). Federal income tax $5,640 after a $4,400 Child Tax Credit, Social Security and Medicare $9,180, Alabama income tax $5,208.
How the Alabama estimate is calculated
- Start from federal adjusted gross income — wages minus traditional 401(k) and Section 125 deductions.
- Subtract the Alabama standard deduction for your filing status, reduced by its income phase-out. Subtract personal exemptions, reduced by the income phase-out (dependents = the number of children you enter). Subtract federal income tax.
- Apply the brackets.
- If you pick a locality, add local tax on wages.
- Divide the annual total by your number of paychecks.
What this Alabama calculator does not model
- The standard deduction chart and dependent exemption tiers are looked up with federal AGI in place of Alabama AGI.
- The federal income tax deduction uses our estimate of your federal income tax liability, not your actual return
- Local occupational (wage) taxes levied by some Alabama cities and counties
- Alabama does not conform to the federal tips, overtime or senior deductions (ALDOR OBBBA analysis, Nov. 2025); those federal deductions are not subtracted here
- Alabama credits (Accountability Act credit, rural physician credit, etc.)
Data notes
- Rates 2%/4%/5% are fixed in the Alabama Constitution/Code and unchanged for 2026. Single, head of family and married filing separately use the $500/$3,000 schedule; only married filing jointly uses the $1,000/$6,000 schedule (2025 Form 40 instructions; January 2026 withholding formula: '“0”, “S”, “H” or “MS”' vs '“M”').
- Standard deduction (2025 Form 40 chart; statutory, not indexed), now modeled by Alabama AGI: single $3,000 less $25 for each $500 (or part) over $25,999, never below $2,500; married filing jointly $8,500 less $175 per $500, never below $5,000; head of family $5,200 less $135 per $500, never below $2,500; married filing separately $4,250 less $88 for each $250 over $12,999, never below $2,500.
- Personal exemption (deduction): $1,500 single/married filing separately; $3,000 married filing jointly or head of family. Dependent exemption by AGI: $1,000 at $50,000 or less, $500 over $50,000 to $100,000, $300 over $100,000. Modeled.
- Alabama allows a deduction for federal income tax liability (no statutory cap for individuals).
Sources
- State income tax: Alabama Department of Revenue – 2025 Form 40 Booklet (tax rate schedule, standard deduction chart, personal and dependent exemptions; amounts are statutory and not indexed) (read 2026-10-07)
- State income tax: Alabama Withholding Tax Tables and Instructions for Employers (Revised January 2026) – formula confirms 2026 rate schedule by status and standard deduction chart (read 2026-10-07)
- State income tax: Alabama Department of Revenue – Individual Income Tax (read 2026-10-07)
- Local income tax: Employers Return of Occupational Tax Withheld – Birmingham Finance Dept. (read 2026-10-07)
Federal figures come from the IRS and SSA; see the methodology page.
Compare nearby and similar states
Neighboring states: Florida, Georgia, Mississippi, Tennessee
States with a similar tax setup: Maryland, Maine, Kansas, District of Columbia, Connecticut, Minnesota
See every state side by side in the salary comparison by state, or browse all state paycheck calculators.