Alabama Paycheck Calculator
Alabama Paycheck Calculator estimates take-home pay from wages after income taxes, FICA, and pre-tax deductions using straightforward assumptions.
Alabama Income Tax Rate
Alabama levies a progressive state income tax with three brackets — 2%, 4%, and 5%. The top rate of 5% applies to higher taxable incomes depending on filing status. This structure ensures that taxpayers contribute proportionally to their income levels.
The Alabama top income tax rate has stayed consistent at 5.00% for over a decade. However, standard deductions and dependent exemptions have increased, lowering effective tax liability for many households. Employers determine state withholding using the A-4 form and pay frequency after accounting for pre-tax deductions like 401(k), HSA/FSA, and insurance.
Local occupational taxes are separate from the state income tax and apply in select cities. The table below lists Alabama’s top individual income tax rate for the last ten years, showing its stability amid ongoing deduction updates.
| Year | Top Rate |
|---|---|
| 2016 | 5.00% |
| 2017 | 5.00% |
| 2018 | 5.00% |
| 2019 | 5.00% |
| 2020 | 5.00% |
| 2021 | 5.00% |
| 2022 | 5.00% |
| 2023 | 5.00% |
| 2024 | 5.00% |
| 2025 | 5.00% |
Alabama Median Household Income
The median household income in Alabama has shown steady growth across the last decade. Economic recovery and wage growth trends have contributed to this increase, although inflation has influenced real purchasing power. (Entity: Alabama | Predicate: median household income | Object: upward trend).
Income levels differ significantly by region. Metropolitan areas such as Huntsville and Birmingham often exceed the state median, while many rural counties fall below it. For precise, county-specific estimates, reference the latest American Community Survey data.
| Year | Income |
|---|---|
| 2016 | $46,300 |
| 2017 | $48,100 |
| 2018 | $50,700 |
| 2019 | $52,900 |
| 2020 | $54,300 |
| 2021 | $55,800 |
| 2022 | $55,200 |
| 2023 | $57,900 |
| 2024 | $59,200 |
| 2025 | $60,400 (prelim.) |
Alabama Cities with Local Occupational Taxes
While Alabama does not impose traditional city income taxes, approximately 26 cities collect an occupational tax on wages earned within their limits. These local wage taxes fund municipal services and vary by location.
| City | Rate |
|---|---|
| Birmingham | 1.00% |
| Bessemer | 1.00% |
| Gadsden | 2.00% |
| Attalla | 2.00% |
| Rainbow City | 2.00% |
| Southside | 2.00% |
| Glencoe | 2.00% |
| Auburn | 1.00% |
| Opelika | 1.50% |
| Tarrant | 1.00% |
How Your Alabama Paycheck Works
Your Alabama paycheck begins with gross pay per period. Employers subtract pre-tax deductions such as traditional 401(k), HSA/FSA, and commuter benefits before computing taxable wages. These deductions reduce both federal and state income tax obligations.
Payroll systems then withhold federal income tax (based on Form W-4), FICA (Social Security and Medicare), and Alabama state income tax (based on Form A-4). Employees working in cities with occupational taxes also see those withholdings. Post-tax deductions like Roth 401(k) or garnishments occur afterward and do not affect taxable income.
Alabama Wage and Hour Laws
Alabama adheres to the federal Fair Labor Standards Act (FLSA). Non-exempt employees earn 1.5× their regular rate for hours worked over 40 per week. Alabama does not have a separate minimum wage, so the federal $7.25 rate applies statewide.
The state does not have a mandatory pay frequency law. Most employers pay biweekly or semimonthly. Upon termination, employees must receive all due wages on the next scheduled payday or as outlined by their employment contract.
FAQs
How do I use the Alabama Paycheck Calculator?
Enter your gross pay, pay frequency, filing status, A-4 details, pre-tax benefits, and any local occupational tax to estimate your take-home pay.
What are Alabama’s current income tax brackets?
Three brackets: 2%, 4%, and 5%. Standard deductions and dependent 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 their boundaries.
How do pre-tax benefits affect my Alabama withholding?
Pre-tax benefits lower your taxable income for Alabama and federal taxes, increasing your take-home pay.
Are bonuses taxed differently in Alabama?
Employers use the same Alabama withholding tables for bonuses. For federal tax, employers may use the flat-rate or aggregate method.
What if I work in an Alabama city with an occupational tax?
Your employer must withhold the applicable city tax on wages earned there, even if you live elsewhere.
Does Alabama have its own minimum wage?
No. Alabama follows the federal minimum wage of $7.25 per hour unless a local government sets a higher rate for public workers.
How often must I be paid in Alabama?
Alabama does not mandate a specific pay frequency, but most employers pay biweekly or semimonthly.
Do remote workers owe Alabama tax?
Residents pay Alabama income tax on all earnings. Nonresidents pay tax only on income sourced from Alabama. Occupational tax applies where the work is performed.
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- Meta Title: Alabama Income Tax Rates, Occupational Taxes & Paycheck Calculator 2025
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