That increases to $2,025 for those earning $29,500-$29,999. Please try again. She spent nearly a year as a ghostwriter for a credit card processing service and has ghostwritten about finance for numerous marketing firms and entrepreneurs. But claiming a few deductions can help reduce that tax burden, which means you’ll be able to keep more of the money you work so hard to earn. Google Chrome, Under Alabama tax laws, you cannot claim foster children, cousins, friends, yourself or your spouse. States lacking an income tax generally make up for it through other types of consumer taxes, such as retail sales tax. See also: Personal income tax Alabama utilized a personal income taxrate ranging from 2 percent to 5 percent in 2017. Federal income tax deduction — The federal government generally allows taxpayers who itemize to deduct up to $10,000 in state and local taxes paid each year. There’s good news for Alabama residents. Take your other taxable income and add in half your benefits, and if the result is more than $25,000 for singles or $32,000 for joint filers, then some of your Social Security will typically be added to your taxable income for federal purposes. 1. Forms To view a complete listing of forms for individual income tax, please visit the forms page. If you have a permanent home in the state of Alabama or you plan to come back after being temporarily located somewhere else, you’re considered a resident of the state for tax purposes. For information on all ad valorem tax exemptions, click here. The State of Alabama has enacted laws to help the disabled by providing a property tax exemption. With federal taxes, you can fall between a wide variety of percentages. But the standard deduction for most taxpayers in the state is $2,000 ($4,000 for joint filers). Parents who provide more than 50 percent of a dependent’s total support can claim the dependent exemption on them, as well. The new bill means that all taxpayers will now be paying 5 percent on the money they earn in the state of Alabama during the tax year. Homeowners 65 and older are exempt from all state property taxes. Alabama collects income taxes from its residents at the following rates. A tax bracket is the income range to which a tax rate applies. 5% on all taxable income over $3,000. Under Homestead Exemption #2 (Act 91) the property owner pays a partial bill or no taxes at all. The rule relies on you having domiciled in the state by doing things like buying a home or getting a driver’s license. Taxpayers age 65 and older with an adjusted gross income of $12,000 or less on their most recent Alabama Income Tax Return–exempt from all of the state portion of the ad valorem taxes and $5,000 of assessed value on the county portion of the ad valorem taxes: Removed the $5,000 exemption provided for in 40-9-19(d). If you are over 65 years of age, or permanent and totally disabled (regardless of age), or blind (regardless of age), you are exempt from the state portion of property tax. The email address cannot be subscribed. If your family falls around the average U.S. household income of just over $56,000 and you file jointly, for instance, you’ll pay only 12 percent in federal taxes. The state of Alabama provides several forms to be used when you wish to purchase tax-exempt items such as prescription medicines, prescription medication or feed for livestock. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. The change was meant to help the state’s low-income wage earners, but it comes as a result of a thriving economy. Dependents can include children, stepchildren, adopted children, parents and stepparents, parental siblings if related by blood and parents- and siblings-in-law. Are you a legal professional? 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