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.
You may be able to claim a standard deduction amount which is up to $7,500; the factors for the standard deduction are dependent on your filing status and adjusted gross income. The standard deduction may be reduced based on your income and will max out at $4,000 for persons using the status of Married Filing Jointly and $2,000 for all other filing status.
The state of Alabama allows a personal exemption for each taxpayer of $1,500, if you are filing jointly with your spouse you will also receive an additional $1,500 exemption for them. You may also qualify for an exemption of $300 to $1,000 per each dependent child; this is determined by your adjusted gross income.
The state of Alabama does not tax Social Security Benefits.
Taxes and Other Retirement Income:
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. If you are domiciled with in the state of Alabama you are required to file a Resident Individual Tax Return.
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. Your domicile may be established by factors of birth, choice or law.
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.
