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Taxes In Alabama

Alabama Tax Rates, Collections, and Burdens

How does Alabama’s tax code compare? Alabama has a graduated state individual income tax, with rates ranging from 2.00 percent to 5.00 percent. There are also jurisdictions that collect local income taxes. Alabama has a 6.50 percent corporate income tax rate. Alabama also has a 4.00 percent state sales tax rate and an average combined state and local sales tax rate of 9.29 percent. Alabama has a 0.36 percent effective property tax rate on owner-occupied housing value.

Alabama does not have an estate tax or inheritance tax. Alabama has a 30.2 cents per gallon gas tax rate and a $0.675 cigarette excise tax rate. The State of Alabama collects $4,227 in state and local tax collections per capita. Alabama has $6,833 in state and local debt per capita and has a 72 percent funded ratio of public pension plans. Alabama’s tax system ranks 38th overall on the 2025 State Tax Competitiveness Index.

Each state’s tax code is a multifaceted system with many moving parts, and Alabama is no exception. The first step towards understanding Alabama’s tax code is knowing the basics. How does Alabama collect tax revenue? Click the tabs below to learn more! You can also explore our state tax maps, which are compiled from our annual publication, Facts & Figures 2024: How Does Your State Compare?

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Tax Data by State

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State Tax Data

Individual Taxes

Top Individual Income Tax Rate
5%See Full Study
State Local Individual Income Tax Collections per Capita
$995Rank: 35
State and Local Tax Burden
9.8%Rank: 13See Full Study

Business Taxes

Top Corporate Income Tax Rate
6.5%See Full Study
State Business Tax Climate Index Ranking
38See Full Study

Sales Taxes

State Sales Tax Rate
4.00%Rank: 40See Full Study
Average Local Sales Tax Rate
5.29%See Full Study
Combined State and Average Local Sales Tax Rate
9.29%Rank: 5See Full Study
State and Local General Sales Tax Collections per Capita
$1360Rank: 28
State Gasoline Tax Rate (cents per gallon)
30.20¢Rank: 23
State Cigarette Tax Rate (dollars per 20-pack)
$0.68Rank: 40

Property Taxes

Property Taxes Paid as a Percentage of Owner-Occupied Housing Value
0.36%Rank: 49
State and Local Property Tax Collections Per Capita
$658Rank: 50

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