Tax Year 2017 Alabama Income Tax Brackets (TY 2017 – 2018)

Alabama – Single Tax Brackets

Tax Bracket Tax Rate
$0.00+ 2%
$500+ 4%
$3000+ 5%

Alabama – Married Filing Jointly Tax Brackets

Tax BracketTax Rate
$0.00+2%
$1000+4%
$6000+5%

Tax brackets and tax rates are ever-changing as the cost of living increases over time. Alabama is no exception to the rule, as its tax brackets were previously updated back in 2008, while the tax rates witnessed an even earlier update in 2001. These rates are no constants though, as they are bound to inflate and are modified on a yearly basis to, as mentioned above, reflect the modifications that the cost of living is witnessing over time.

Understanding Alabama Tax Bracket

In Alabama, taxation is governed by three marginal tax brackets, for which the marginal rates include 2%, 4%, and 5%. Each of these marginal rates is only applicable to earnings within the corresponding tax bracket.

Furthermore, tax brackets depend on the filing type, which means that married couples, for example, who file their income tax return jointly, will generally have broader tax brackets compared to those filing their tax return individually.

Understanding tax brackets may seem tricky, but it’s quite simple: you need to pay every Alabama marginal tax rate starting from the lowest bracket to the highest tax bracket in which your last buck was earned. You don’t have one “tax bracket,” you have as many as your earnings go. Although for comparison sake, your Alabama tax bracket is defined as the tax bracket in which you earned your last dollar in any tax period.

Understanding Alabama Bracketed Income

Simply put, bracketed income tax is a flat amount that you have to pay for all your earnings to the highest bracket, along with a marginal percentage of any earnings that exceed the highest bracket. All of that is broken down in the chart below:

 

For earnings between $0.00 and $500.00, you’ll pay 2%
For earnings between $500.00 and $3000.00, you’ll pay 4% plus $10.00
For earnings over $3000, you’ll pay 5% plus $110.00
 
For earnings between $0.00 and $10000.00, you’ll pay 2%
For earnings between $1000.00 and $6000.00, you’ll pay 4% plus $20.00
For earnings over $6000, you’ll pay 5% plus $220.00
 

Alabama Tax Deductions

Another essential feature of the Alabama income tax that you need to understand is deductions, mainly the Alabama Standard Deduction, the Alabama Personal Exemption, and the Alabama Dependent Deduction. These deductions are the most commonly encountered by taxpayers in this state, and their values for the tax year 2016 are the following:

Standard Deduction (S)Standard Deduction (M)Personal ExemptionDependent Exemption
$2500.00$7500.00$1500.00$1000.00

 

Breakdown of Wisconsin Tax Deductions

Alabama Standard Deduction: This is the default deduction available to every taxpayer should they fail to file an itemized deduction. The values of this deduction are:

  • $2500.00 of tax-free income per year for single taxpayers.
  • $7500.00 of tax-free income per year for taxpayers filing jointly.

Alabama Personal Exemption: This deduction is supported by the Alabama income tax, and it is available for every taxpayer responsible for their own living expenses.

Alabama Dependent Deduction: In addition to the Alabama Personal Exemption, for each qualifying dependent under your wing, such as a child or a family member, for whom you support the living expenses, you can get an additional dependent exemption. These deductions aren’t specific to Alabama, as the Federal Income Tax also has a standard deduction, personal exemptions, and dependent deductions, which are applicable in all states nationwide. Keep in mind that their amounts and rules may differ from those of Alabama.