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Does Alabama Tax Military Retirement Pay? (2026)

Updated October 4, 2026. Quick answer: No. The 2025 Form 40 booklet lists military retirement pay among retirement amounts that “are not taxable and should not be reported.” No dollar cap or age threshold is printed.

How Alabama treats military retired pay

ItemWhat the documents say
TreatmentMilitary retirement pay is listed as income you do not report
Cap or ageNone printed
Where it is writtenThe 2025 Form 40 instructions booklet; the statute itself was not retrievable from the code publisher

A $30,000 example

A retiree with $30,000 of military retired pay reports none of it on the Alabama return, so owes Alabama $0 on it.

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What changes in 2026

No 2026 change is printed in the documents read.

Federal rules

The state’s treatment sits on top of the federal one. The IRS explains the federal side in Publication 3, Armed Forces’ Tax Guide.

Related: whether Alabama taxes pensions, how Alabama taxes retirement income, military retirement pay by state, and the military retirement calculator.

Sources

Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.

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