Alabama Paycheck Calculator

Alabama income tax rate

Alabama levies a progressive state income tax with brackets topping at 5.00%. Lower brackets apply at 2% and 4%, and recent reforms raised standard deductions and dependent exemptions for many filers, reducing effective liability without changing the top rate. Employers figure Alabama withholding using your A-4 and pay frequency after subtracting pre-tax benefits (401(k), HSA/FSA, insurance). Local occupational taxes (where applicable) are separate from the state income tax. The table below shows the top Alabama individual rate for the last ten years, which has remained steady while thresholds and deductions have seen periodic updates.

Alabama median household income

Alabama’s median household income has trended upward over the decade, with modest pandemic-era volatility and recent gains driven by tight labor markets and inflation adjustments. Remember: nominal dollars don’t account for price changes; “real” purchasing power may differ. Medians vary widely by region—Greater Huntsville and parts of Birmingham typically exceed the statewide median, while rural counties trend lower. Use the figures below as directional benchmarks when negotiating offers, planning relocations, or comparing Alabama metros to national norms. Always check the latest American Community Survey releases for current, official estimates specific to your county or metropolitan area.

Alabama number of cities that have local income taxes

Alabama does not levy traditional city “income” taxes, but about 26 cities impose an occupational tax on wages earned in the city. Rates and rules vary by municipality; examples below.

How Your Alabama Paycheck Works

Your paycheck starts with gross wages per period. Pre-tax deductions (traditional 401(k), HSA/FSA, commuter, and pre-tax insurance) reduce taxable wages for federal and Alabama income tax calculations. Payroll then withholds federal income tax (W-4), FICA (Social Security and Medicare), and Alabama state tax using your A-4 elections. If you work in a city with an occupational tax, your employer also withholds that percentage of wages. Post-tax items (Roth 401(k), garnishments, charity) are taken after taxes and do not reduce taxable income. Pay frequency changes per-check amounts but not your total annual tax liability.

Alabama Wage and Hour Laws: Overtime, Pay Frequency

Alabama follows the federal FLSA: most non-exempt employees earn 1.5× their regular rate for hours over 40 in a workweek. Alabama has no separate statewide minimum wage (the federal $7.25 applies) and no specific pay-frequency statute; employers commonly pay biweekly or semimonthly and must pay all earned wages on the next regular payday when employment ends.

FAQs

How do I use the Alabama Paycheck Calculator?

Enter gross pay, pay schedule, filing status, A-4 details, pre-tax benefits, and any city occupational tax to estimate take-home pay.

What are Alabama’s current income tax brackets?

Three brackets: 2%, 4%, and 5% top rate. Standard deductions and exemptions may reduce taxable income.

Does Alabama have city income taxes?

Not traditional income taxes, but many cities charge an occupational tax on wages earned within city limits.

How do pre-tax benefits affect my Alabama withholding?

They lower taxable wages for Alabama and federal income taxes, typically increasing your take-home per dollar contributed.

Are bonuses taxed differently in Alabama?

Employers withhold Alabama tax using the same schedules; federal supplemental methods (percentage or aggregate) may apply for federal withholding.

What if I work in an Alabama city with an occupational tax?

Your employer withholds the city’s percentage on wages earned there, even if you live elsewhere.

Does Alabama have its own minimum wage?

No. Alabama defaults to the federal minimum wage of $7.25 per hour unless a local ordinance for public employers sets higher rates.

How often must I be paid in Alabama?

State law doesn’t set a strict frequency; common schedules are biweekly or semimonthly, established in employer policy or contract.

Do remote workers owe Alabama tax?

Residents are taxed on all income; nonresidents owe Alabama tax on Alabama-sourced wages. City occupational tax depends on where the work is performed.