Alabama

Tax Rate Range: Low - 2.0%; High - 5.0%
Income Brackets: *Lowest - $500; Highest - $3,000
Number of Brackets: 3
Personal Exemptions: Single - $1,500; Married - $3,000; Dependents - $300
Standard Deduction: Single - $2,000; Married filing joint return - $4,000
Medical/Dental Deduction: Limited to excess of 4% of adjusted gross income
Federal Income Tax Deduction: Full
Retirement Income Taxes: Social Security, military, civil service, state/local government and qualified private pensions are exempt. All out-of-state government pensions are tax-exempt if they are defined benefit plans.
Retired Military Pay: Pay and survivor benefits not taxed.
Military Disability Retired Pay: Disability Portion - Length of Service Pay; Member on September 24, 1975 - No tax; Not Member on September 24, 1975 - Taxed, unless combat incurred. Retired Pay - Based solely on disability: Member on September 24, 1975 - No tax; Not Member on September 24, 1975 - Taxed, unless all pay based on disability and disability resulted from armed conflict, extra-hazardous service, simulated war, or an instrumentality of war.
VA Disability Dependency and Indemnity Compensation: Not subject to federal or state taxes
Military SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax. Check with state department of revenue office.

Sales Taxes

State Sales Tax: 4% (prescription drugs exempt); The rate can go as high as 12.0% depending on city and county taxes. The state administers over 200 different city and county sales taxes; however, it does not administer all county or city sales taxes. View municipal sales taxes
Gasoline Tax: 21.3 cents/gallon
Diesel Fuel Tax: 22.7 cents/gallon Local option taxes on fuel may add up to 3 cents.)
Cigarette Tax: 42.5 cents/pack of 20

The state does not collect taxes on personal property such as boats and computers. Its ad valorem (property tax) is 6.5 mills (http://216.226.178.107/Taxincentives/proptaxincentives.html). Each city and county may levy has its own millage rate. For information on all ad valorem tax exemptions, click here. Homeowners 65 and older are exempt from all county property taxes. Some cities also assess separate property taxes. A homestead exemption up to $5,000 of assessed value is granted by the state on real property taxes. A larger exemption is available to persons over 65. Visit state's property tax division web site.

There is no inheritance tax and the estate tax is limited to federal estate tax collection.
For further information, visit the Alabama Department of Revenue site or call 334-242-1170.