Alabama Income Tax


What is Alabama State Income Tax?

Alabama state income tax is a tax issued by a state on your income because you’re a resident of the state or because you earned income within a tax year in the state. Similar to federal taxes, the amount self-assessed and are often based on a percentage you pay the state government on your income.

Who Pays AL State Tax?

Similar to residency at the federal tax level, states impose additional income taxes on your earnings if you have a sufficient connection to the state.

So, if you earn an income and live or work in the state, you must pay AL state tax. As a traditional W-2 employee, your Alabama tax will be drawn on each payroll automatically. You will see this on your paycheck, near or next to the federal taxes.

If you work remotely, you should pay taxes to the state in which the work is performed. Employers will generally also pay taxes on wages paid to these workers to the same state, even if the employer has no physical presence in that state. However, some states may require that workers are taxed based on their employer’s location.

How Do You Pay AL Taxes?

To pay AL tax, you can pay via:

1 – Debit Payment

Debit payments must be made through My Alabama Taxes.

2 – Credit Card

You must be pre-approved by the Alabama Department of Revenue to make ACH Credit Method Payments.  To register with the ADOR, complete and submit the Authorization Agreement for ACH Credit Payment Method form.

Taxpayers granted the authority to use the ACH Credit payment method are responsible for coordinating with their financial institutions to ensure that ACH Credit payments are timely and properly initiated.

When Are Alabama Tax Returns Due?

The state tax deadlines often coincide with the federal tax deadline, which typically falls on or around April 15. (For tax year 2020, the deadline is July 15.)

Deducting Alabama Income Taxes

If you pay Alabama income tax, the IRS allows you to claim a deduction on your federal tax return for them. You can claim a state income tax deduction if you itemize deductions on your federal return.

To determine if you should itemize your deductions, add up your calendar-year deductible expenses, including your state income tax expense, to see if they are greater than the standard deduction amount for your filing status. For 2019, you can claim a standard deduction of $12,200. So, if you pay Alabama income tax and other itemized deductions greater than the deduction, consider itemizing your taxes.

Due to the Tax Cuts and Jobs Act, state and local tax deductions, including state income taxes, are limited to $10,000 per year.

More Help With Alabama State Tax

Understanding your tax obligation can be confusing. What’s even more confusing is how to deduct Alabama state tax from your federal taxes as an itemized deduction.

So, get help! Use Tax Pro Go, virtual tax prep offered by H&R Block. With this service, we’ll match you with a tax pro with Alabama tax expertise. Then, you will upload your tax documents, and our tax pros will do the rest! We can even help with not only Alabama taxes, including the federal deduction for paying state taxes.

Taking in these Alabama tax considerations, we can make sure you are supported when it comes to taxes.

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