Alabama paycheck taxes at a glance
| Income tax on wages | Progressive, 2% – 5% |
|---|---|
| Minimum wage (2026) | $7.25 an hour (Alabama has no state minimum wage law, so the federal rate applies) |
Local taxes: Some Alabama cities and counties, such as Birmingham, levy occupational taxes on wages.
2026 Alabama income tax brackets (single filers)
| Taxable income | Rate |
|---|---|
| $0 – $499 | 2% |
| $500 – $2,999 | 4% |
| $3,000 and up | 5% |
Example: a $67,700 salary in Alabama
The median household income in Alabama is about $67,663 (2025 data). Here's what one earner with that salary, paid every two weeks, filing single with no pre-tax deductions, would see on each paycheck in 2026:
| Gross pay | $2,603.85 |
|---|---|
| Federal income tax | −$233.23 |
| Social Security | −$161.44 |
| Medicare | −$37.76 |
| Alabama income tax | −$109.30 |
| Take-home pay | $2,062.12 |
That's $53,615 a year in take-home pay, or 20.8% of gross pay going to taxes.
Take-home pay by salary in Alabama
Single filer, paid biweekly, standard W-4, no pre-tax deductions:
| Salary | Per paycheck | Per year | State taxes | Total tax rate |
|---|---|---|---|---|
| $40,000 | $1,257.35 | $32,691 | $1,629 | 18.3% |
| $60,000 | $1,841.58 | $47,881 | $2,509 | 20.2% |
| $80,000 | $2,376.48 | $61,789 | $3,322 | 22.8% |
| $100,000 | $2,887.63 | $75,079 | $4,102 | 24.9% |
| $150,000 | $4,144.91 | $107,768 | $6,023 | 28.2% |
| $200,000 | $5,423.22 | $141,004 | $7,923 | 29.5% |
What changed for 2026
- A 2026 law (HB 527) lets you subtract up to $1,000 of qualified overtime pay from Alabama taxable income for tax years 2026 through 2028. Alabama's earlier full exemption for overtime pay ended June 30, 2025.
- The state sales tax on groceries, cut to 2% on September 1, 2025, was suspended from May 1 to June 30, 2026 under the same law. Local sales taxes on food still applied.
Alabama pay rules worth knowing
- Alabama has no state law setting how often employers must pay wages, according to the U.S. Department of Labor's survey of state payday rules. Your employer's regular schedule applies.
- Because there's no state minimum wage, tipped employees covered by federal law can be paid a cash wage of $2.13 an hour, as long as tips bring them up to $7.25.
How Alabama figures the tax on your pay
Alabama’s rates look simple: 2%, 4% and 5%, with the 5% rate starting at just $3,000 of taxable income for single filers ($6,000 for joint filers). Since almost everyone with a full-time job reaches it, the rates matter less than the deductions in front of them. Three of those work differently from most states.
Federal income tax is deductible. Alabama subtracts the federal income tax you owe for the year before applying its own rates. A higher federal bill lowers your Alabama bill a little, so the state’s effective rate is lower than the 5% headline. The calculator includes this deduction.
The standard deduction shrinks with income. Instead of a flat amount, Alabama uses a chart. A single filer gets $3,000 until Alabama adjusted gross income reaches $26,000, then $25 less for each $500 of income, down to a floor of $2,500. Married couples filing jointly start at $8,500 and lose $175 per $500, down to $5,000. Head-of-family filers have a separate scale starting at $5,200.
Dependent exemptions are tiered. Each dependent is worth $1,000 if your income is $50,000 or less, $500 up to $100,000, and $300 above that.
None of these amounts is indexed for inflation, so they’re the same as last year.
City and county occupational taxes
Some Alabama cities and counties levy an occupational tax, a percentage of wages earned within their limits. It’s tied to where you work, not where you live, and it’s separate from state income tax. Birmingham is one example. Rates and rules vary by locality, so check your pay stub or ask the city. If one applies to you, enter it in the Local income tax rate field above to see its effect.
Overtime and the 2026 change
Alabama’s earlier exemption for overtime pay ended on June 30, 2025. A 2026 law (HB 527) replaced it with a smaller, capped break: for tax years 2026 through 2028, you can subtract up to $1,000 of qualified overtime pay, meaning the premium federal law requires above your regular rate, from Alabama taxable income. You can take it whether or not you itemize. The calculator doesn’t model this subtraction, so if you work regular overtime your actual Alabama tax for the year may be up to $50 lower than shown (5% of $1,000).
Groceries and sales tax
Alabama’s state sales tax on food fell from 3% to 2% on September 1, 2025, and the same 2026 law suspended the remaining 2% from May 1 to June 30, 2026. Local sales taxes on groceries still applied during that window. Sales tax doesn’t touch your paycheck, but it’s part of what an Alabama household pays.
The income tax calculator estimates your full-year federal bill, which also drives your Alabama deduction. The salary calculator converts an hourly rate to annual pay.
Estimates only. Your employer’s payroll system and your W-4 determine your actual paycheck.
How we calculate: Head of household uses the single standard deduction and exemption (Alabama’s larger head-of-household amounts are not modeled).
Sources
- U.S. Department of Labor: State minimum wage laws
- U.S. Department of Labor: Minimum wages for tipped employees
- U.S. Department of Labor: State payday requirements
- Alabama Department of Revenue: Individual income tax
- Alabama Department of Revenue: 2025 Form 40 booklet (standard deduction chart, exemptions)
- Alabama Political Reporter: Gov. Ivey signs tax relief bill (HB 527)
- Census Bureau: Household Income in States and Metropolitan Areas, 2025
- revenue.alabama.gov
- IRS Publication 15-T (federal withholding)
Frequently asked questions
Can I deduct federal income tax on my Alabama return?
Yes. Alabama is one of the few states that allows a deduction for the federal income tax you actually owe for the year. You figure it with a worksheet in the Form 40 instructions, using your federal return. The calculator above applies it automatically.
Why is my Alabama standard deduction smaller than my coworker's?
It depends on income. A single filer gets $3,000 with Alabama adjusted gross income up to $25,999. From $26,000 it drops $25 for every $500 of income, bottoming out at $2,500 from $35,500. Married couples filing jointly start at $8,500 and lose $175 per $500, down to $5,000.
How much is the Alabama dependent exemption?
It depends on your adjusted gross income. It's $1,000 per dependent up to $50,000 of income, $500 from $50,001 to $100,000, and $300 above $100,000. That's on top of the personal exemption of $1,500 (single) or $3,000 (married filing jointly).
Is overtime pay taxed in Alabama in 2026?
Mostly, yes. For 2026 through 2028, you can subtract up to $1,000 of qualified overtime pay, meaning the federally required premium above your regular rate, from your Alabama taxable income. Overtime above that is taxed like other wages.
Does Alabama have a minimum wage?
No. Alabama has no state minimum wage law, so employers covered by the federal Fair Labor Standards Act must pay at least $7.25 an hour, or $2.13 an hour plus tips for tipped employees.
Facts verified November 6, 2026. Estimates only; your employer's payroll system and your W-4 determine your actual withholding.