Taxes in Alabama

Alabama Tax Rates, Collections, and Burdens

How does Alabama’s tax code compare? Alabama has a graduated 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 has a 4.00 percent state sales tax rate, a max local sales tax rate of 7.50 percent, and an average combined state and local sales tax rate of 9.25 percent. Alabama’s tax system ranks 41st overall on our 2023 State Business Tax Climate Index.

Each state’s tax code is a multifaceted system with many moving parts, and Alabama is no exception. The first step towards understanding the Alabama tax code is knowing the basics. How does Alaska 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: How Does Your State Compare?

Sales Tax Holidays: Politically Expedient but Poor Tax Policy, 2019

July 24, 2019

Facts and Figures 2019: How Does Your State Compare?

March 19, 2019

2019 State Business Tax Climate Index

September 26, 2018

Protecting Interstate Taxpayers from Discriminatory State Taxation: CSX Transportation v. Alabama Department of Revenue

May 31, 2017

Alabama Lawmakers Still Haven’t Reached a Budget Agreement

June 12, 2015

Alabama Considers Several Tax Increase Plans

May 14, 2015

10 Remaining States Provide Tax Filing Guidance to Same-Sex Married Taxpayers

March 20, 2015

Alabama Education Funding Diverted to Pay for Film Incentives

April 3, 2012

Alabama Aims to Shield Tax Incentives from Legal Challenges

February 29, 2012

Reflecting on the Tax Legacy of the Civil War, 150 Years Later

July 21, 2011

Highest Sales Tax in the United States

March 10, 2011

U.S. Supreme Court Sides with Tax Foundation Brief, Reaffirming that Tax Exemptions Can Be Discriminatory

February 22, 2011

Public Employee Retirees in Alabama Town Face Broke Pension Plan

December 23, 2010

Supreme Court Considers Whether Sales Tax Exemptions Can Be Discriminatory Taxes

September 13, 2010

Which States Tax Celebrations of Independence from Taxation?

July 3, 2008

Birmingham Mayor: Let’s Raise Taxes to Build a Domed Stadium

November 20, 2007