Updated September 5, 2026. Quick answer: Alabama’s income tax treats pensions based on plan type, not age: traditional defined-benefit pensions, whether public, private, federal civil service, or military, are fully exempt from Alabama income tax, while withdrawals from IRAs and 401(k)/403(b) defined-contribution accounts are generally taxable except for a $6,000 exclusion per person for filers 65 and older.
State retirement-income forms, line by line: Alabama Schedule RS.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Alabama tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Alabama tax 403(b) and 457(b) withdrawals.
Drawing a pension? Whether the state withholds tax from it, from its own documents: Alabama tax withholding on pension payments.
Married, or planning for a spouse’s death? Whether the state is a community property state, from its own statutes: Is Alabama a community property state?.
Selling your home? How the state taxes the profit, from its own tax documents: Does Alabama tax the profit from selling your home?.
The state’s income tax schedule: the Alabama tax brackets for 2026.
A pension earned in another state, or paid after a move, is covered here: does Alabama tax out-of-state pensions.
Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Alabama tax withholding on IRA and 401(k) withdrawals.
Trusts have their own page: does Alabama tax trust income.
Dividends and interest have their own page: does Alabama tax dividends and interest.
Inheriting from, or planning for, someone in this state? Whether the state has an inheritance tax, from its own tax documents: Does Alabama have an inheritance tax?.
Contributing to an HSA? How the state taxes it, from its own tax documents: Does Alabama tax HSA contributions?.
Annuity payments have their own page: does Alabama tax annuity income.
Planning for what you leave behind? The state’s estate tax answer, from its own tax documents: Does Alabama have an estate tax?.
Saving for a child’s college? The state’s 529 break has its own page: Alabama 529 plan tax deduction.
Military retired pay has its own page: does Alabama tax military retirement.
Selling stocks, funds or real estate has its own page: does Alabama tax capital gains.
Withdrawals from a 401(k) or IRA have their own page: does Alabama tax 401(k) and IRA withdrawals.
More on Alabama: When Is Probate Required in Alabama?
Confidence note: high. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how Alabama taxes retirement income generally.
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | Public pensions paid from a defined benefit plan, including Alabama’s own Teachers’ Retirement System, Employees’ Retirement System, and Judicial Retirement System benefits, are exempt from Alabama income tax because they qualify as defined benefit retirement plans under IRC 414(j), per the Alabama Department of Revenue. |
|---|---|
| Private (employer) pensions | Private-employer pensions are exempt from Alabama income tax on the same basis, as long as they are paid from a qualified or nonqualified defined benefit plan (including SERPs and excess benefit plans); the exemption applies only to the extent the benefit is taxable for federal purposes, and only to genuine defined benefit plan distributions, not defined contribution accounts. |
| Federal government pensions (FERS/CSRS) | United States Civil Service Retirement System benefits and other United States Government Retirement Fund benefits are listed by the Alabama Department of Revenue as exempt from Alabama income tax, as is Federal Railroad Retirement. |
| Military retirement pay | Military retirement pay is explicitly listed by the Alabama Department of Revenue as exempt from Alabama income taxation. |
| IRA and 401(k)/403(b) distributions | Distributions from IRAs and defined-contribution plans such as 401(k)s and 403(b)s do not qualify as defined benefit plan income and are generally taxable in Alabama. Alabama Department of Revenue Schedule RS instructions describe a $6,000 exclusion of otherwise-taxable retirement income for a taxpayer, and separately for a spouse, who is 65 or older; this figure was located in a search engine’s copy of the official Schedule RS instructions, since the PDF itself did not yield readable text this session. |
| General retirement-income exclusion | Beyond the age-65, $6,000-per-person exclusion described above for otherwise-taxable retirement income (mainly IRA/401k/403b distributions), Alabama has no separate general retirement-income exclusion; its primary mechanism is the categorical exemption for defined benefit plan income rather than a broad age-based exclusion. |
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Alabama does not tax Social Security benefits at all; see the sibling Social Security page for details. Social Security has its own rules in every state; see the full breakdown in how Alabama taxes retirement income generally.
Figures verified against the Alabama Department of Revenue exempt-income page and Ala. Admin. Code r. 810-3-19-.04; the $6,000 age-65 exclusion in Schedule RS instructions was not re-checked on September 30, 2026.
Statute and sources
Governing citation: Ala. Code sec. 40-18-19; Ala. Admin. Code r. 810-3-19-.04.
- Alabama Department of Revenue, Income Exempt from Alabama Income Taxation
- Ala. Admin. Code r. 810-3-19-.04, Defined Benefit Plans (Alabama Dept. of Revenue rule text, Cornell LII mirror)
Read September 5, 2026.
Related: how Alabama taxes retirement income generally · does Alabama tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.