In fact, Alabama is also one of just two states that taxes all food at the full sales tax rate, without offering any form of food tax rebate or relief. However, while the federal income tax has seven brackets, Alabama has just three, with the top rate of 5% applying to all taxable income over $3,000.Īmong the types of products subject to the rates above are clothing, furniture, electronics and automobiles. The state income tax in Alabama is similar to the federal income tax, with increasing rates based on income brackets.
If you’re ready to find an advisor who can help you achieve your financial goals, get started now. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. The statewide sales tax of 4% ranks as one of the lowest in the country, but local sales taxes bring the average sales tax in the state up to 9.24%, which is the fifth-highest nationwide.Ī financial advisor can help you understand how taxes fit into your overall financial goals. However, rates could be higher depending on where in Alabama you live or work, as local governments can also collect income taxes ranging from 0% to 2%. Alabama has the second lowest average effective property tax rate in the country, and its income tax rates range from just 2% to 5%, lower than most other states that have an income tax. Taxes in the Yellowhammer State are by and large lower than in most other states.
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