Updated October 8, 2026. Quick answer: Alabama taxes income at 2% on the first $500, 4% on the next $2,500 and 5% above $3,000 for single filers, head of family and married filing separately; married filing jointly uses $1,000, $5,000 and $6,000 as the matching dividing lines. These come from the Department of Revenue’s withholding formula revised January 2026.
The Alabama rates
| Single, head of family or married filing separately | Rate |
|---|---|
| First $500 | 2% |
| Next $2,500 (to $3,000) | 4% |
| Over $3,000 | 5% |
| Married filing jointly | Rate |
|---|---|
| First $1,000 | 2% |
| Next $5,000 (to $6,000) | 4% |
| Over $6,000 | 5% |
The Department’s formula sets out the schedule as “1st $ 500 2% 1st $1,000 2%”, with the next bands at 4% and everything above at 5%. The rates apply to a taxable amount after the standard deduction, a personal exemption, dependents and, in the formula, federal income tax withheld.
The standard deduction shrinks as income rises
| Filing status | Largest deduction | Smallest deduction |
|---|---|---|
| Single | $3,000 | $2,500 |
| Married filing jointly | $8,500 | $5,000 |
| Head of family | $5,200 | $2,500 |
| Married filing separately | $4,250 | $2,500 |
The formula says a single filer takes “GI of $25,999 or less deduct $3,000”, reduced by $25 for each $500 of gross income above that point until it reaches $2,500 at $35,500 of gross income. A married filing jointly filer’s smallest amount is “GI of $35,500 or more deduct $5,000”; a married filing separately filer’s smallest amount is $2,500. The personal exemption in the formula is $1,500 for single or married filing separately and $3,000 for married or head of family.
A worked example
As a computed example (an illustration, not a source figure), take $100,000 of Alabama taxable income. For a single filer the tax is $4,960 (computed): 2% of the first $500, 4% of the next $2,500 and 5% of the rest. A married couple filing jointly would owe $4,920 (computed) on the same taxable amount, using the $1,000 and $5,000 bands.
What this page does not say
The figures come from an employer withholding formula, not the Form 40 instructions or the Alabama Code, which were not read. The formula’s standard deduction depends on gross income and its taxable amount also subtracts federal income tax, so a return can differ from this arithmetic.
Common mistakes
- Applying 5% to the first dollar. The 2% and 4% bands come first.
- Using the single bands for a joint return. The joint dividing lines are $1,000 and $6,000.
- Forgetting that the standard deduction falls as income rises.
Related: how Alabama taxes retirement income, whether Alabama taxes pensions, how Alabama taxes capital gains, and the federal 2026 tax brackets.
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Answer againSources
- Alabama Department of Revenue, Withholding Tax Tables and Instructions for Employers and Withholding Agents (revised January 2026): https://www.revenue.alabama.gov/wp-content/uploads/2026/01/whbooklet_0126.pdf
- Alabama Department of Revenue (where later updates appear; no figure on this page comes from it): https://www.revenue.alabama.gov/
Sources: the primary documents linked above, read on October 8, 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.