Alabama income tax on pension and retirement benefits depends on income type like pension, social security, defined benefit plan, etc. Different tax rules apply for state/federal pension and private pension. Retirement Taxes
Alabama income tax on pension and retirement benefits depends on income type like pension, social security, defined benefit plan, etc. Different tax rules apply for state/federal pension and private pension.
State Tax Exemptions
Private Pension: Private defined benefit pensions are fully tax-exempt. You need to report all other pension payments as taxable income.
None/Full
State and Local Pension: Pension payment from state and local government bodies are fully tax exempt.
Exempt
Federal Pension: All federal pension and retirement payments are fully tax exempt for residents. Out of state federal pensions are tax-exempt if they are defined benefit plans.
Exempt
Military Pension: Exempt
Military retirement pay are not taxable in Alabama
Social Security: Yes
Social Security benefits are tax exempt.
Pension Age Restriction: No
Pension Income Restriction: No
Disability Income: VA disability benefits are not taxable.