State tax docs / States / Alabama
Alabama state income tax: engine rules, 2026
How the QuantCalc engine computes Alabama tax for tax year 2026, rule by rule, with the official source for each rule. Verification status: Worksheet-tested (what this means).
On this page: How the tax is computed · Rate schedule · Deductions, exemptions and credits · Social Security · IRA, 401(k) and private pensions · Public pensions · Military retirement pay · Roth conversions · Capital gains · Interaction with the federal return · Part-year and nonresident returns · Worked examples · After 2026 · Not calculated ·
Verification. Machine-readable: this state's entry in the
engine config and the provenance file
(key AL).
How the tax is computed
Every step the engine takes for Alabama, in the order it takes them. Steps marked with a filing status or household type apply only there. Each step links the section below that carries Alabama's figures and the official sources for it; the calculation order page describes every step for all jurisdictions.
What each filing status gets, read back from the engine for a household with $1 of income (so below every phase-out and income test):
| Single | Married filing jointly | Married filing separately | Head of household | |
|---|---|---|---|---|
| Rate schedule used | single schedule | joint schedule | joint schedule, thresholds halved | single schedule |
| Top rate | 5% from $3,000 | 5% from $6,000 | 5% from $3,000 | 5% from $3,000 |
| Standard deduction, under 65 | $3,000 | $8,500 | $4,250 | $5,200 |
| Standard deduction at 70 (joint: both 70) | $3,000 | $8,500 | $4,250 | $5,200 |
| Personal exemption | $1,500 | $3,000 | $1,500 | $3,000 |
| Age subtractions at 70 (joint: both 70) | none | none | none | none |
- Per-person mode joint returns with the spouse's age given On a joint return with the spouse's age given, every age test the state applies per taxpayer is evaluated for each spouse at their own age. Without it one household age applies to both.
engine step (compute_state_tax_detail). Engine convention, no external source: The engine cannot know the second spouse's age unless told. - Blindness and disability, per person only when the caller says a person is blind or disabled The filer is person one; the spouse counts only on a joint return and only when the caller says so (there is no household convention as for age). Where a state lets a disabled person (and, where it says so, a blind one, or one whose spouse is disabled) qualify for its general retirement exclusion before the age, that person is treated as having reached the age for that exclusion only. Of the 42 taxing jurisdictions, these have a blind amount: Arizona, Arkansas, California, Colorado, Delaware, the District of Columbia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, North Dakota, Oklahoma, Oregon, Utah, Vermont and Virginia; these have none: Alabama, Connecticut, Georgia, Louisiana, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, West Virginia and Wisconsin. A disability route is calculated in Arkansas, the District of Columbia, Georgia, Hawaii, Idaho, Iowa, Maryland, Michigan, New Jersey, Oregon and West Virginia.
engine step (compute_state_tax_detail). Engine convention, no external source: Who is blind or disabled is the caller's statement; the engine has no household convention for it. - Rate schedule and standard deduction by filing status Single uses the single schedule and deduction; married filing jointly the joint ones. Head of household and married filing separately follow the two steps below.
Alabama's values · engine step (select_brackets). Sources (Rate schedule): Individual Income Tax (checked 2026-10-12); Alabama Department of Revenue: 25f40bk.pdf (checked 2026-10-12); Alabama Department of Revenue: 25f40.pdf (checked 2026-10-12) - Married filing separately Where the state publishes its own separate schedule, that one (with half the joint deduction unless a separate deduction is set). Where one schedule applies to every status, that schedule unscaled with the single deduction. Otherwise the joint schedule with every threshold and the deduction halved (computed as the joint tax on twice the income, halved).
Alabama's values · engine step (select_brackets). Sources (Rate schedule): Individual Income Tax (checked 2026-10-12); Alabama Department of Revenue: 25f40bk.pdf (checked 2026-10-12); Alabama Department of Revenue: 25f40.pdf (checked 2026-10-12) - Head of household The state's head-of-household schedule where it has one, else the single schedule; the head-of-household deduction where set, else the single deduction.
Alabama's values · engine step (select_brackets). Sources (Rate schedule): Individual Income Tax (checked 2026-10-12); Alabama Department of Revenue: 25f40bk.pdf (checked 2026-10-12); Alabama Department of Revenue: 25f40.pdf (checked 2026-10-12) - The income total every income test uses Other ordinary income + retirement distributions (before any exclusion) + conversion + federally taxable Social Security + long-term gains + Railroad Retirement Tier 2. It stands in for federal adjusted gross income in every threshold, cliff and phase-out below; state subtractions do not reduce it.
engine step (compute_state_tax_detail). Engine convention, no external source: The inputs are the federal AGI components, so their sum is federal AGI for these income types. - Attributing income to each spouse joint returns with each spouse's own amounts given With a caller's split (the API's
spouseobject), each spouse's own distributions (employer-plan money included), pension, public pension, conversion, wages and military pay; spouse 2's shares are clamped into the household totals and spouse 1 gets the rest. Without a split, in per-person mode, every item is divided 50/50. Social Security is divided by each spouse's own gross benefits where the caller givesspouse.socialSecurityGross, else 50/50; other ordinary income and gains are always divided 50/50 where a rule needs a per-person amount. The split is used only where a state's rule is per taxpayer; household totals stay authoritative for the base and the income tests.
engine step (compute_state_tax_detail). Engine convention, no external source: Equal attribution is the neutral split when the owner of a dollar is not known. - Keeping the per-spouse shares inside the household joint returns with each spouse's own amounts given After the public-pension and employer-pension carve-outs, if the two spouses' remaining shares add up to more than the household's exclusion-eligible distributions (an inconsistent split), spouse 1's share is reduced so they do not.
engine step (compute_state_tax_detail). Engine convention, no external source: Input normalisation. - Military retirement pay The state's military rule runs first, on military pay alone, per taxpayer: each spouse's own pay at their own age when attributed, otherwise half each at the household age on a joint return. Exempt dollars leave the base; the rest become pension dollars for the general retirement rules. Where the state lets a disabled retiree qualify at any age, a disabled person is treated as having reached the rule's age.
Alabama's values · engine step (compute_state_tax_detail). Sources (Military retirement pay): Income exempt from alabama income taxation (checked 2026-10-12) - One taxpayer's military exemption Exempt: all of it (below the age split, up to the younger cap). Capped: up to the cap for the age tier, plus the earned-income bonus below the age split when the taxpayer's own wages exceed the threshold, less the taxpayer's own Social Security where the rule says so. Percentage: the percentage (below the age split, up to the younger cap). Then the income limit: above it the exemption is lost, or phased out over the range where one is set.
Alabama's values · engine step (military_exempt_one). Sources (Military retirement pay): Income exempt from alabama income taxation (checked 2026-10-12) - Capital-loss deduction off the base The deduction comes off the other ordinary income (negative income, as Form 1040 line 7a is), so the base and every state-AGI figure summed from it carry it; WI no more than Wisconsin ordinary income (Schedule WD line 28(c)). States whose base is federal taxable income (with the caller's figure) already have it there and take it only once. Engine 1.13.1: the allowed rental loss comes off the same way, on its own line (rental_loss_deduction).
Alabama's values · engine step (compute_state_tax_detail). Sources (Capital gains): 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12); 2025 Form 40 Booklet (checked 2026-10-12) - Employer pension exemption Employer (defined-benefit) pension dollars, public or private, leave the base; IRA dollars keep the capped exclusion.
Alabama's values · engine step (compute_state_tax_detail). Sources (Public pensions): 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12); Rule 810-3-19-.04 Defined Benefit Plans (checked 2026-10-12) - Social Security exempt None of the federally taxable benefit enters the base.
Alabama's values · engine step (ss_amount_in_state_base). Sources (Social Security): 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12) - Does a conversion draw the retirement cap? Where the state lets a conversion draw the capped exclusion, and the filer is at or above the conversion age (the state's own pooling age where it has one; any age for a disabled person where the state says so), the conversion is pooled with distributions against the cap. A spouse who elects not to claim the exclusion draws none of it.
Alabama's values · engine step (compute_state_tax_detail). Sources (Roth conversions): 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12) - Retirement exclusion per spouse (both ages known) joint returns with the spouse's age given Full-exclusion states exclude each qualifying spouse's own dollars. Capped states give each spouse the single cap for their own age against their own eligible dollars (pension dollars only where the exclusion is pension-only; employer dollars only below the IRA age), less their military exclusion and their own Social Security offset (by the spouse's stated gross benefits, else half). Per-return states (and the pooled-if-both-qualify rule when both qualify) apply the joint cap to the couple's pooled eligible dollars when either spouse qualifies. The income tests then apply once to the summed deduction.
Alabama's values · engine step (compute_state_tax_detail). Sources (IRA, 401(k) and private pensions): 2025 Schedule RS (Form 40 or Form 40NR) (checked 2026-10-12) - Conversion pooled with distributions The conversion joins the distributions against the one cap (with a spouse split in a per-taxpayer state, each spouse's own distributions and conversion against that spouse's cap). Nothing of the conversion is added separately.
Alabama's values · engine step (compute_state_tax_detail). Sources (Roth conversions): 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12) - Retirement exclusion (household) The distributions eligible for the exclusion go through the exclusion below. Taxable public-pension dollars left by a cap are not eligible; below the IRA age only employer-plan dollars are.
Alabama's values · engine step (compute_state_tax_detail). Sources (IRA, 401(k) and private pensions): 2025 Schedule RS (Form 40 or Form 40NR) (checked 2026-10-12) - Retirement exclusion per spouse (declared split) joint returns with each spouse's own amounts given With a spouse split in a per-taxpayer state, each spouse's own eligible dollars draw that spouse's single cap (less their military exclusion); an income limit then applies once to the sum.
Alabama's values · engine step (compute_state_tax_detail). Sources (IRA, 401(k) and private pensions): 2025 Schedule RS (Form 40 or Form 40NR) (checked 2026-10-12) - Conversion taxed or exempt In full-exclusion states a conversion is exempt at the qualifying age (at any age where the state says so). Elsewhere, unless pooled above, it is ordinary income taxed in full.
Alabama's values · engine step (compute_state_tax_detail). Sources (Roth conversions): 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12) - Cap by age tier The full cap at or above the exclusion age, the lower cap at or above the partial age, otherwise none. Joint returns use the joint cap; every other status the single cap.
Alabama's values · engine step (retirement_distributions_in_state_base). Sources (IRA, 401(k) and private pensions): 2025 Schedule RS (Form 40 or Form 40NR) (checked 2026-10-12) - The capped deduction Deduction = the smaller of the eligible distributions and the cap, then reduced by the income limit above; the rest of the distributions stays in the base.
Alabama's values · engine step (retirement_distributions_in_state_base). Sources (IRA, 401(k) and private pensions): 2025 Schedule RS (Form 40 or Form 40NR) (checked 2026-10-12) - One taxpayer's cap joint returns with the spouse's age given For per-spouse calculations, each spouse's cap is the single-column cap for their age tier.
Alabama's values · engine step (per_taxpayer_cap_single). Sources (IRA, 401(k) and private pensions): 2025 Schedule RS (Form 40 or Form 40NR) (checked 2026-10-12) - Long-term gains in the base Where gains are taxed as ordinary income: net long-term gain less the flat exclusion (never below zero), times the inclusion share. Elsewhere none enters.
Alabama's values · engine step (compute_state_tax_detail). Sources (Capital gains): 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12); 2025 Form 40 Booklet (checked 2026-10-12) - Standard deduction chart on state AGI From the status's start the maximum deduction loses a fixed step for each band (or part) of state AGI (the income in the base before any deduction), down to a floor.
Alabama's values · engine step (compute_state_tax_detail). Sources (Deductions, exemptions and credits): 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12); Individual Income Tax (checked 2026-10-12); Alabama Department of Revenue: 25f40.pdf (checked 2026-10-12); 2025 Form 40 booklet, Standard Deduction chart (page 9) and dependent chart (checked 2026-10-12) - Personal exemption The joint amount on a joint return, the head-of-household amount where set, otherwise the single amount.
Alabama's values · engine step (compute_state_tax_detail). Sources (Deductions, exemptions and credits): 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12); Individual Income Tax (checked 2026-10-12); Alabama Department of Revenue: 25f40.pdf (checked 2026-10-12); 2025 Form 40 booklet, Standard Deduction chart (page 9) and dependent chart (checked 2026-10-12) - Dependent exemptions and deductions only when the caller lists dependents An amount per dependent subtracted like the personal exemption: the state's flat amount, or the stepped per-exemption amount the filer gets, or the state's own income steps; nothing above an income limit where there is one; a percentage phase-out per income step where there is one; one more for a dependent in an age band or a student up to an age, for a dependent born in the year, and for a disabled dependent; a deduction per dependent beyond the first on joint and head-of-household returns; and a child deduction by an income table for dependents under an age. A head of household's status exemption that already holds one dependent's amount counts one fewer. Where the state says so, the phase-out is measured on the state AGI (the base before deductions).
Alabama's values · engine step (compute_state_tax_detail). Sources (Deductions, exemptions and credits): 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12); Individual Income Tax (checked 2026-10-12); Alabama Department of Revenue: 25f40.pdf (checked 2026-10-12); 2025 Form 40 booklet, Standard Deduction chart (page 9) and dependent chart (checked 2026-10-12) - State taxable income Other ordinary income + Social Security, retirement income, conversion and gains left in the base − standard deduction − personal exemption − age subtractions.
engine step (compute_state_tax_detail). Engine convention, no external source: The order of subtraction follows the state forms; each amount is sourced at its own step. - Federal income tax deduction only when the caller supplies federal tax Only when the caller supplies federal tax. Full: the federal tax plus the net investment income tax. Capped: the federal tax (without the net investment income tax where the state says so) up to the cap, which loses 20% of itself for each band of income from the start (joint and head-of-household returns on the joint bands, separate returns half the cap). Where the state subtracts them (the full deduction), less the federal refundable credits the caller gives, never below zero.
Alabama's values · engine step (compute_state_tax_detail). Sources (Interaction with the federal return): 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12); Rule 810-3-15-.20 Federal Income Tax Deduction - Individuals (checked 2026-10-12); Individual Income Tax (checked 2026-10-12) - No tax at or below zero State taxable income at or below zero returns a tax of 0 (credits are not refundable), unless the state has a tax computed apart from taxable income that still applies (next step).
engine step (compute_state_tax_detail). Engine convention, no external source: Every credit the engine carries is nonrefundable, so nothing below can make a zero tax negative; each credit is sourced at its own step. - Separate-return scaling married filing separately For the halved-joint rule, taxable income is doubled before the schedule and the result halved.
Alabama's values · engine step (compute_state_tax_detail). Sources (Rate schedule): Individual Income Tax (checked 2026-10-12); Alabama Department of Revenue: 25f40bk.pdf (checked 2026-10-12); Alabama Department of Revenue: 25f40.pdf (checked 2026-10-12) - The rate schedule Each bracket's rate on the part of taxable income inside it, summed. No rounding: the result is carried in full precision.
Alabama's values · engine step (apply_state_brackets). Sources (Rate schedule): Individual Income Tax (checked 2026-10-12); Alabama Department of Revenue: 25f40bk.pdf (checked 2026-10-12); Alabama Department of Revenue: 25f40.pdf (checked 2026-10-12) - Credits cannot make the tax negative The credits are subtracted and the result floored at zero.
engine step (compute_state_tax_detail). Engine convention, no external source: Every credit the engine carries is nonrefundable; each credit is sourced at its own step. - Qualifying surviving spouse qualifying surviving spouse returns A qualifying surviving spouse (
filingStatusqss) is one person on the return, taxed from the single figures with the state's own treatment of the status laid over them: where the state says so, the joint rate schedule, the joint standard deduction, the joint personal exemption, the joint income limits and phase-outs (only those the state sets for joint returns), the married 65+ and blindness amounts, or the head-of-household return; where the state gives the status nothing of its own, the single return. The federal figures the engine derives for the status are the federal qualifying-surviving-spouse ones (the joint standard deduction, the married 65+ amount).
Alabama's values · engine step (state_tax_effective_config). Sources (Rate schedule): Individual Income Tax (checked 2026-10-12); Alabama Department of Revenue: 25f40bk.pdf (checked 2026-10-12); Alabama Department of Revenue: 25f40.pdf (checked 2026-10-12) - Railroad Retirement benefits only when the caller gives Railroad Retirement benefits Railroad Retirement benefits are never taxed by a state (45 U.S.C. §231m). Tier 2 (
railroadRetirementTier2) is in the income total the tests use but never in the base. Tier 1 (railroadRetirementTier1) is a part of the gross benefits (socialSecurityGross); its share of the taxable benefits is taken out of the Social Security every state rule sees, so a state that taxes Social Security never reaches it. Where a state's worksheet says so, the benefits reduce a retirement cap or subtraction (ID, IN, MD, ME, MN: both tiers; MI: the taxable railroad benefits); Minnesota's and Utah's Social Security rules test an income without them, Minnesota's, New Jersey's and California's retirement income tests an income without Tier 2; Ohio and Delaware test their own AGI everywhere, which never holds the benefits.
Alabama's values · engine step (compute_state_tax_detail). Sources (Social Security): 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12) - The capital-loss deduction the state allows With a net capital loss (capitalLoss): the smaller of the loss and the state's limit (the federal $3,000 / $1,500 where the state follows the federal return; MA $2,000, and no more than the interest and dividends); AL the loss less the part carried in, unlimited; PA and NJ none. It comes off the income total the income tests use (and the Social Security worksheets' income); the gross-income filing test (LA) reads the total before it. Engine 1.13.1: with a rental loss (rentalNetIncome below 0, the federal Schedule E line 26 amount) the state allows, the whole loss where the state starts from federal AGI or follows the federal schedule, none in PA and NJ (rental_loss_no_offset): it comes off the same income the same way; a rental profit is other ordinary income.
Alabama's values · engine step (compute_state_tax_detail). Sources (Capital gains): 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12); 2025 Form 40 Booklet (checked 2026-10-12) - Each spouse's own Social Security joint returns On a joint return, each spouse's own Social Security is the spouse's share of the benefits by
spouse.socialSecurityGrosswhen the caller gives it (Tier 1 railroad benefits left out), else half each. It is what the per-spouse rules read: Colorado's per-spouse subtraction, Rhode Island's per-spouse modification, and the Maine, Maryland and other retirement caps reduced by the benefits each spouse received (with each spouse's own railroad benefits where the state counts them).
Alabama's values · engine step (compute_state_tax_detail). Sources (Social Security): 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12) - Refundable state credits The credits paid beyond the tax (reported in refundableCredits; netTax = totalTax less them): earned income credits as a share of the federal EIC with each state's own age band (OK on the 2020 federal credit, DC's own childless schedule, the CalEITC table, MN's Working Family Credit), the NYC EIC and school tax credits, and the property-tax, renter, grocery and senior credits of MA, MI, NJ, ID, HI, NM, OK, AZ, NY, RI, WV, ME, DC, MN, MO, WI, IN and MT, each on its own income measure. Engine 1.13.1: a part-year NYC resident's school tax credits (the Table 2 proration chart and the rate-reduction amount on IT-360.1 line 47; IT-203 lines 60 / 60a for a part-year state resident).
Alabama's values · engine step (state_tax_refundable_credits). Sources (Deductions, exemptions and credits): 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12); Individual Income Tax (checked 2026-10-12); Alabama Department of Revenue: 25f40.pdf (checked 2026-10-12); 2025 Form 40 booklet, Standard Deduction chart (page 9) and dependent chart (checked 2026-10-12)
Rate schedule
Single
| Taxable income from | to | Rate |
|---|---|---|
| $0 | $500 | 2% |
| $500 | $3,000 | 4% |
| $3,000 | and up | 5% |
Married filing jointly
| Taxable income from | to | Rate |
|---|---|---|
| $0 | $1,000 | 2% |
| $1,000 | $6,000 | 4% |
| $6,000 | and up | 5% |
Head of household uses the single schedule.
Married filing separately: the engine computes the MFJ tax on twice the income and halves it, which is the same as halving every MFJ threshold and the MFJ deduction.
Source review notes (what the sources do not state outright, or what the engine does not carry):
- The DOR page is an undated statutory summary; no 2026-specific rate schedule was found (the 2025 Form 40 booklet tax tables apply the same brackets).
- Individual Income Tax, Alabama Department of Revenue. Alabama taxes taxable income at 2% on the first $500, 4% on the next $2,500 and 5% over $3,000 for single filers, and at 2% on the first $1,000, 4% on the next $5,000 and 5% over $6,000 for married couples filing jointly. Checked 2026-10-12.
- Alabama Department of Revenue: 25f40bk.pdf, Alabama Department of Revenue. Engine 1.7.0: Form 40 line 14: a dependent exemption per dependent of $1,000 at AL AGI up to $50,000, $500 to $100,000, $300 above (the tier is a cliff on the whole amount). Head of family: a $3,000 personal exemption and the $5,200 maximum standard deduction (engine 1.8.0 steps it down by the line 11b chart on AL AGI). TY2025 booklet; the amounts are fixed in statute. Checked 2026-10-12.
- Alabama Department of Revenue: 25f40.pdf, Alabama Department of Revenue. Engine 1.7.0: Form 40 line 14: a dependent exemption per dependent of $1,000 at AL AGI up to $50,000, $500 to $100,000, $300 above (the tier is a cliff on the whole amount). Head of family: a $3,000 personal exemption and the $5,200 maximum standard deduction (engine 1.8.0 steps it down by the line 11b chart on AL AGI). TY2025 booklet; the amounts are fixed in statute. Checked 2026-10-12.
Deductions, exemptions and credits
- Standard deduction (or the exemption the engine carries in its place): $3,000 single, $8,500 married filing jointly, $5,200 head of household.
- Personal exemption, subtracted in addition: $1,500 single, $3,000 MFJ, $3,000 head of household.
- 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions), Alabama Department of Revenue. The Alabama standard deduction depends on AL adjusted gross income: $3,000 single / $8,500 married filing jointly at AGI up to $25,999, phasing down to $2,500 / $5,000 at AGI of $35,500 and above; the personal exemption is $1,500 single and $3,000 married filing jointly. Engine 1.7.0: Form 40 line 14: a dependent exemption per dependent of $1,000 at AL AGI up to $50,000, $500 to $100,000, $300 above (the tier is a cliff on the whole amount). Head of family: a $3,000 personal exemption and the $5,200 maximum standard deduction (engine 1.8.0 steps it down by the line 11b chart on AL AGI). TY2025 booklet; the amounts are fixed in statute. Checked 2026-10-12.
- Individual Income Tax, Alabama Department of Revenue. The Alabama Constitution provides minimum personal exemptions of $1,500 for single taxpayers and $3,000 for joint filers. Checked 2026-10-12.
- Alabama Department of Revenue: 25f40.pdf, Alabama Department of Revenue. Engine 1.7.0: Form 40 line 14: a dependent exemption per dependent of $1,000 at AL AGI up to $50,000, $500 to $100,000, $300 above (the tier is a cliff on the whole amount). Head of family: a $3,000 personal exemption and the $5,200 maximum standard deduction (engine 1.8.0 steps it down by the line 11b chart on AL AGI). TY2025 booklet; the amounts are fixed in statute. Checked 2026-10-12.
- 2025 Form 40 booklet, Standard Deduction chart (page 9) and dependent chart, Alabama Department of Revenue. Engine 1.8.0: the standard deduction (Form 40 line 11b) is a chart on AL AGI (line 10): the maximum ($3,000 single, $8,500 MFJ, $5,200 head of family) loses $25 / $175 / $135 for each $500 from $26,000 to the floor ($2,500 / $5,000 / $2,500) at $35,500; MFS $4,250 loses $88 for each $250 from $13,000 to $2,500 at $17,750. The dependent chart (line 14) is on the same line 10. Checked 2026-10-12.
IRA, 401(k) and private pensions
- Pension, annuity and IRA/401(k) distributions: up to $6,000 excluded per taxpayer ($12,000 on a joint return) at age 65 or older.
- Joint returns: the cap is per taxpayer. With the spouse's age given (couples), each spouse's own dollars are tested against that spouse's own age and cap; without it one household age applies and the $12,000 joint cap covers pooled income.
Source review notes (what the sources do not state outright, or what the engine does not carry):
- The statute (Ala. Code §40-18-19(a)(13), Act 2022-294) could not be fetched from an official site; the enacted act PDF on rsa-al.gov returned HTTP 403.
- 2025 Schedule RS (Form 40 or Form 40NR), Alabama Department of Revenue. A taxpayer aged 65 or older may exclude up to $6,000 of retirement income taxable to Alabama (IRA, 401(k), 403(b) and other defined-contribution distributions), computed separately for the primary taxpayer and the spouse. Checked 2026-10-12.
Public pensions
Employer (defined-benefit) pension dollars, public or private, entered as pension income, are fully exempt. IRA and 401(k) dollars keep the capped treatment above.
- 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions), Alabama Department of Revenue. Benefits from Alabama's state retirement systems (Teachers', Employees', Judicial), federal civil service and other listed public systems, and any IRC §414(j) defined-benefit plan are not taxable in Alabama. Checked 2026-10-12.
- Rule 810-3-19-.04 Defined Benefit Plans, Alabama Department of Revenue. Payments from a defined-benefit plan (IRC §414(j)), public or private, are exempt from Alabama income tax to the extent they are federally taxable. Checked 2026-10-12.
Military retirement pay
- Military retirement pay is fully exempt, at any age.
- Rules are applied per taxpayer at that person's own age when the spouse's age is given. API value:
rules.militaryRetirement.treatment: "exempt".
- Income exempt from alabama income taxation, Alabama Department of Revenue. Military retirement pay is exempt from Alabama income tax. Checked 2026-10-12.
Roth conversions
A conversion draws the retirement-income exclusion together with distributions from age 65; the part above the cap is taxed as ordinary income.
Source review notes (what the sources do not state outright, or what the engine does not carry):
- No official page states in terms that the conversion draws the $6,000 exclusion; this follows from Schedule RS line 9 (which includes the conversion) feeding line 10 (the exclusion) without a plan-type carve-out.
- 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions), Alabama Department of Revenue. The taxable portion of a traditional-to-Roth IRA conversion is reported on Schedule RS Part II (taxpayer) or Part III (spouse), where it is taxable retirement income that can draw the $6,000 age-65+ exclusion. Checked 2026-10-12.
Capital gains
- Net long-term gain is taxed as ordinary income.
- Short-term gains are ordinary income.
Source review notes (what the sources do not state outright, or what the engine does not carry):
- No page states 'no preferential rate' in terms; the booklet simply includes the gain in income taxed on the single rate schedule.
- The capital-gain inputs are the federal net gains: a year in which a federal carryover absorbs part of the year's gain is not re-grossed for Alabama (no carryover there).
- 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions), Alabama Department of Revenue. Net gain from the sale of stocks, bonds and other capital assets is reported on Schedule D and included in Alabama income taxed at the ordinary rates; there is no separate capital-gains rate. Checked 2026-10-12.
- 2025 Form 40 Booklet, Alabama Department of Revenue. Alabama deducts the whole net capital loss in the year it occurs: no $3,000 limit and no carryover (engine 1.9.0: cap_loss_in_year_unlimited). Checked 2026-10-12.
Interaction with the federal return
- Federal income tax for the year, including the net investment income tax, is deductible in full. It applies only when the caller supplies
federalTax(andfederalNiit); without it the deduction is not taken and state tax is overstated.
- 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions), Alabama Department of Revenue. Alabama allows a deduction for federal income tax, computed on the Federal Income Tax Deduction Worksheet as the Form 1040 tax plus the Net Investment Income Tax (Form 8960) less refundable credits, with no dollar cap. Checked 2026-10-12.
- Rule 810-3-15-.20 Federal Income Tax Deduction - Individuals, Alabama Department of Revenue. The deductible federal income tax is the net federal liability shown due on the federal return, after credits, on a paid or accrued basis. Checked 2026-10-12.
- Individual Income Tax, Alabama Department of Revenue. Amendment No. 225 to the Alabama Constitution provides the deduction for federal income taxes paid by individuals. Checked 2026-10-12.
Part-year and nonresident returns
- Part-year resident (Form 40 (part-year)): the tax on the state's own income, nothing prorated.
- Nonresident (Form 40NR): the tax on the state's own income (what was received while a resident, plus the state-source income while a nonresident), with the deductions and exemptions the form prorates scaled by its ratio.
- The ratio: the state's own AGI (after its subtractions) of the state's income over the state AGI of the whole year, not rounded (the form states no rounding), at most 1.
- Prorated on a part-year return: the federal income tax deduction.
- Prorated on a nonresident return: the standard deduction, the personal exemptions, the federal income tax deduction, dependent exemptions.
- Part-year (Form 40): the federal income tax deduction × Alabama AGI / federal AGI. Nonresident (40NR): the standard deduction and exemptions × the ratio; the engine prorates the federal tax deduction the same way as Form 40 does.
- A nonresident's retirement income is not taxable by the state (4 U.S.C. §114); the API refuses it in
residency.stateIncome. The credit for tax paid to another state and the earned income credits on these returns are not computed.
Married couples whose residency differs (engine 1.13.0)
With residency.spouse on a joint request, each allowed treatment is calculated and reported in residency.couple; tax is the required one, else the state's default, else the couple's residency.election, else the joint return the request's mfj names. Each rule is quoted from the state's instructions (engine 1.14.0: and its statutes, regulations, bulletins and other official guidance) in the sources below.
| Spouses | Alabama's rule |
|---|---|
| One spouse a full-year resident, the other a part-year resident | separate returns, the only return the state's documents describe for these spouses; Ala. Admin. Code r. 810-3-27-.01 allows a joint return only when both spouses were residents of Alabama for the tax year, and no source says whether a part-year resident is one. |
| One spouse a full-year resident, the other a nonresident | separate returns is required. |
| One spouse a part-year resident, the other a nonresident | separate returns is required. |
| Both part-year residents, different resident periods | separate returns, the only return the state's documents describe for these spouses; Ala. Admin. Code r. 810-3-27-.01 allows a joint return only when both spouses were residents of Alabama for the tax year, and no source says whether a part-year resident is one. |
| Both nonresidents, only one with income from the state | the couple's choice: a joint part-year / nonresident return or separate returns. |
- 2025 Alabama Form 40 Booklet — Residents and Part-Year Residents, Forms and Instructions, Alabama Department of Revenue. Part-year / nonresident return (engine 1.12.0, residency): Part-year residents: Form 40 reports ONLY income earned while a resident (source/period method), with FULL standard deduction and personal/dependent exemptions; itemized deductions limited to those paid while resident; federal income tax deduction prorated by AL AGI / federal AGI. If the part-year resident also had AL-source income while a nonresident, that goes on a separate Form 40NR with no exemptions. Nonresidents (Form 40NR): method D — tax on Alabama-source income; standard deduction, personal exemption and dependent exemption mu Checked 2026-10-12.
- 2025 Alabama Form 40NR Booklet — Nonresidents, Forms and Instructions, Alabama Department of Revenue. Part-year / nonresident return (engine 1.12.0, residency): Part-year residents: Form 40 reports ONLY income earned while a resident (source/period method), with FULL standard deduction and personal/dependent exemptions; itemized deductions limited to those paid while resident; federal income tax deduction prorated by AL AGI / federal AGI. If the part-year resident also had AL-source income while a nonresident, that goes on a separate Form 40NR with no exemptions. Nonresidents (Form 40NR): method D — tax on Alabama-source income; standard deduction, personal exemption and dependent exemption mu Checked 2026-10-12.
- 2025 Alabama Form 40 Booklet — Residents and Part-Year Residents, Forms and Instructions, Alabama Department of Revenue. Married couples whose residency differs (engine 1.13.0): Checked 2026-10-12.
- 2025 Alabama Form 40NR Booklet — Nonresidents, Forms and Instructions, Alabama Department of Revenue. Married couples whose residency differs (engine 1.13.0): Checked 2026-10-12.
- Ala. Admin. Code r. 810-3-27-.01 When An Individual Return Is Required, Alabama Legislative Services Agency (official publisher of the Alabama Administrative Code); rule of the Alabama Department of Revenue. Married couples whose residency differs (engine 1.13.0): Checked 2026-10-12.
- Ala. Admin. Code r. 810-3-2-.01 Individuals Subject To Alabama Income Tax, Alabama Legislative Services Agency / Alabama Department of Revenue. Married couples whose residency differs (engine 1.13.0): Checked 2026-10-12.
- Ala. Admin. Code r. 810-3-19-.02 Personal Exemptions And Credit For Dependents, Alabama Legislative Services Agency / Alabama Department of Revenue. Married couples whose residency differs (engine 1.13.0): Checked 2026-10-12.
- Ala. Admin. Code r. 810-3-15-.21 Deductions For Nonresidents, Alabama Legislative Services Agency / Alabama Department of Revenue. Married couples whose residency differs (engine 1.13.0): Checked 2026-10-06.
- Filing Statuses for Individual Tax Returns, Alabama Department of Revenue. Married couples whose residency differs (engine 1.13.0): Checked 2026-10-12.
- 2025 Alabama Form 40 Booklet (Residents and Part-Year Residents), Alabama Department of Revenue. Married couples whose residency differs (engine 1.13.0): Checked 2026-10-12.
Worked examples
Computed by the engine for the fixed households below (the same ones for every state, so states compare directly). Federal tax is not supplied, so a federal-tax deduction is not taken; the income tests use the sum of the components as income.
| Household (engine inputs) | State tax |
|---|---|
| Single, 67: $30,000 private pension, $20,000 IRA, $10,000 interest, $24,000 Social Security ($17,000 federally taxable), $5,000 long-term gain | $1,193.75 |
| Married filing jointly, 70: $40,000 public pension, $40,000 IRA, $20,000 interest, $40,000 Social Security ($34,000 federally taxable), $10,000 long-term gain | $2,420 |
| Single, 60: $60,000 other ordinary income and a $50,000 Roth conversion | $5,260 |
| Married filing jointly, 66: $30,000 IRA, a $40,000 Roth conversion, $30,000 Social Security ($25,500 federally taxable) | $2,420 |
| Single, 58: $36,000 military retirement pay and $30,000 wages | $1,246.25 |
| Married filing jointly, ages 67 and 61: $50,000 IRA, $10,000 interest, $30,000 Social Security ($25,500 federally taxable), each spouse's age given | $2,220 |
Line by line
The intermediate lines the engine records while it computes each example (its detail record, printed as it comes out; lines that are zero are left out). The engine's documentation build checks that the lines add up to the taxable income and the tax, for every state, filing status and a grid of households. Each line links the engine step that produces it.
Single, 67: $30,000 private pension, $20,000 IRA, $10,000 interest, $24,000 Social Security ($17,000 federally taxable), $5,000 long-term gain: $1,193.75
| Line | Amount |
|---|---|
| Income total used by the income tests | $82,000 |
| Retirement income and conversions excluded (not in the base) | $36,000 |
| + Other ordinary income in the base | $10,000 |
| + Retirement income in the base | $14,000 |
| + Long-term gain in the base | $5,000 |
| − Standard deduction | $2,825 |
| − Personal exemption | $1,500 |
| = State taxable income | $24,675 |
| Tax from the rate schedule | $1,193.75 |
| = Tax before credits | $1,193.75 |
| = Tax | $1,193.75 |
Married filing jointly, 70: $40,000 public pension, $40,000 IRA, $20,000 interest, $40,000 Social Security ($34,000 federally taxable), $10,000 long-term gain: $2,420
| Line | Amount |
|---|---|
| Income total used by the income tests | $144,000 |
| Retirement income and conversions excluded (not in the base) | $52,000 |
| + Other ordinary income in the base | $20,000 |
| + Retirement income in the base | $28,000 |
| + Long-term gain in the base | $10,000 |
| − Standard deduction | $5,000 |
| − Personal exemption | $3,000 |
| = State taxable income | $50,000 |
| Tax from the rate schedule | $2,420 |
| = Tax before credits | $2,420 |
| = Tax | $2,420 |
Single, 60: $60,000 other ordinary income and a $50,000 Roth conversion: $5,260
| Line | Amount |
|---|---|
| Income total used by the income tests | $110,000 |
| + Other ordinary income in the base | $60,000 |
| + Roth conversion in the base | $50,000 |
| − Standard deduction | $2,500 |
| − Personal exemption | $1,500 |
| = State taxable income | $106,000 |
| Tax from the rate schedule | $5,260 |
| = Tax before credits | $5,260 |
| = Tax | $5,260 |
Married filing jointly, 66: $30,000 IRA, a $40,000 Roth conversion, $30,000 Social Security ($25,500 federally taxable): $2,420
| Line | Amount |
|---|---|
| Income total used by the income tests | $95,500 |
| Retirement income and conversions excluded (not in the base) | $12,000 |
| + Retirement income in the base | $58,000 |
| − Standard deduction | $5,000 |
| − Personal exemption | $3,000 |
| = State taxable income | $50,000 |
| Tax from the rate schedule | $2,420 |
| = Tax before credits | $2,420 |
| = Tax | $2,420 |
Single, 58: $36,000 military retirement pay and $30,000 wages: $1,246.25
| Line | Amount |
|---|---|
| Income total used by the income tests | $66,000 |
| Military pay excluded (not in the base) | $36,000 |
| + Other ordinary income in the base | $30,000 |
| − Standard deduction | $2,775 |
| − Personal exemption | $1,500 |
| = State taxable income | $25,725 |
| Tax from the rate schedule | $1,246.25 |
| = Tax before credits | $1,246.25 |
| = Tax | $1,246.25 |
Married filing jointly, ages 67 and 61: $50,000 IRA, $10,000 interest, $30,000 Social Security ($25,500 federally taxable), each spouse's age given: $2,220
| Line | Amount |
|---|---|
| Income total used by the income tests | $85,500 |
| Retirement income and conversions excluded (not in the base) | $6,000 |
| + Other ordinary income in the base | $10,000 |
| + Retirement income in the base | $44,000 |
| − Standard deduction | $5,000 |
| − Personal exemption | $3,000 |
| = State taxable income | $46,000 |
| Tax from the rate schedule | $2,220 |
| = Tax before credits | $2,220 |
| = Tax | $2,220 |
After 2026: how the amounts move
A request with projection (API) estimates a later tax year from these rules: every
dollar amount and age test below moves the way Alabama's law moves it. Rates and the rules themselves stay the 2026 ones
(how projection works).
| Amounts (engine fields) | After 2026 | What the law says, and the source |
|---|---|---|
brackets_single (the single rate schedule's thresholds), brackets_mfj (the mfj rate schedule's thresholds) | Fixed in law: held at the rules-year amount in every later year. | Code 40-18-5: 2% of the first $500 ($1,000 joint), 4% to $3,000 ($6,000 joint), 5% above; fixed dollar amounts, no adjustment provision.
|
std_deduction_single, std_deduction_mfj, std_deduction_hoh, std_chart_start, std_chart_width, std_chart_step, std_chart_floor | Fixed in law: held at the rules-year amount in every later year. | Code 40-18-15(b)(4) (tax years after 2021): $3,000 single / $8,500 joint / $5,200 head of family / $4,250 MFS below AGI $25,500 ($12,750 MFS), reduced by $25/$175/$135 per $500 ($88 per $250 MFS) above it, to floors of $2,500/$5,000/$2,500/$2,500; fixed amounts with no indexing. The 2025 DOR chart uses the same figures.
|
personal_exemption_single, personal_exemption_mfj, personal_exemption_hoh | Fixed in law: held at the rules-year amount in every later year. | Code 40-18-19(a)(8): $1,500 single, $3,000 head of family or married; fixed.
|
dep_tier_agi, dep_tier_amount, dep_tier_amount_above | Fixed in law: held at the rules-year amount in every later year. | Code 40-18-19(a)(9): per dependent $1,000 at AGI up to $50,000, $500 up to $100,000 (tax years after 2021), $300 otherwise; fixed.
|
retirement_income_exclusion_single, retirement_income_exclusion_mfj | Fixed in law: held at the rules-year amount in every later year. | Code 40-18-19(a)(13) (Act 2022-294): beginning 2023 the first $6,000 of taxable retirement income per taxpayer 65 or older is exempt; fixed amount.
|
retirement_exclusion_min_age, conversion_exclusion_min_age | Attained age: the same age in every year. | The $6,000 retirement exemption may be claimed only by taxpayers 65 or older: a fixed attained age.
|
Enacted for later years, not applied by the projection
None found: the research found no change enacted for years after 2026 beyond the schedules above.
What the engine does not calculate, and known approximations
- The standard deduction follows the Form 40 line 11b chart on AL AGI (engine 1.8.0); the booklet's chart steps are applied to the exact AL AGI (no rounding to whole dollars).
- The federal income tax deduction applies only when the caller supplies federal tax; without it Alabama tax is overstated.
- Itemized deductions are not calculated, and for Alabama that matters for most wage earners: Schedule A lets a filer itemize the FICA tax (Social Security and Medicare) and federal self-employment tax, which alone exceeds the standard deduction at most wage levels. The engine always takes the standard deduction, so for a wage earner it overstates Alabama tax (single, 40, wages $70,000, federalTax $6,570: $2,931.50 against $2,788.75 itemizing FICA).
- The federal income tax deduction is federalTax (line 22) plus federalNiit less federalRefundableCredits (Form 40 worksheet lines 1-6); without federalRefundableCredits none are subtracted, which understates Alabama tax for a filer with refundable credits (engine 1.8.0, DIFF-AL-03).
- The exclusion of a net capital gain from exchanging precious metal bullion is not calculated: the capital-gains input does not say what was sold, so such a gain is taxed. Sources: 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12); 2025 Form 40 Booklet (checked 2026-10-12).
- Interest on United States obligations and on Alabama state and local bonds, and unemployment compensation, which Alabama exempts, and interest on other states' bonds, which Alabama taxes, are not calculated: the ordinary income input does not identify them. Sources: 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12); Rule 810-3-15-.20 Federal Income Tax Deduction - Individuals (checked 2026-10-12); Individual Income Tax (checked 2026-10-12).
- Wages Alabama taxes above the federal amount (a public employee's retirement-system contributions, which are not deferred for Alabama) are not calculated: the wages input is the federal figure. Sources: 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12); Rule 810-3-15-.20 Federal Income Tax Deduction - Individuals (checked 2026-10-12); Individual Income Tax (checked 2026-10-12).
- On separate Alabama returns of a couple filing a joint federal return, the federal tax deduction must be the share of the joint federal tax by each spouse's federal adjusted gross income; the engine deducts the federal tax it is given, so the caller must supply that share. Sources: 2025 Form 40 Booklet (Alabama Individual Income Tax Instructions) (checked 2026-10-12); Rule 810-3-15-.20 Federal Income Tax Deduction - Individuals (checked 2026-10-12); Individual Income Tax (checked 2026-10-12).
- Married couples whose residency differs (engine 1.13.0): when one spouse is a full-year resident and the other a part-year resident: Ala. Admin. Code r. 810-3-27-.01 allows a joint return only when both spouses were residents of Alabama for the tax year, and no source says whether a part-year resident is one; when both spouses are part-year residents with different resident periods: Ala. Admin. Code r. 810-3-27-.01 allows a joint return only when both spouses were residents of Alabama for the tax year, and no source says whether a part-year resident is one. Sources: 2025 Alabama Form 40 Booklet — Residents and Part-Year Residents, Forms and Instructions (checked 2026-10-12); 2025 Alabama Form 40NR Booklet — Nonresidents, Forms and Instructions (checked 2026-10-12); 2025 Alabama Form 40 Booklet — Residents and Part-Year Residents, Forms and Instructions (checked 2026-10-12); 2025 Alabama Form 40NR Booklet — Nonresidents, Forms and Instructions (checked 2026-10-12); 2025 Alabama Form 40 Booklet (Residents and Part-Year Residents) (checked 2026-10-12).
What the engine does not calculate for any state (itemized deductions, credits beyond those listed, part-year residents, and more) is listed on the calculation order page.
Verification
Worksheet-tested Golden rows follow the Form 40 federal-income-tax worksheet and Schedule RS (per-spouse line 10).
- Golden scenarios (hand-computed expected tax, asserted to within $1):
AL01,ALFIT1,ALPEN1,ALCONV1,ALSP1,ALSP2,ALSP3. - State-specific unit tests:
test_al_pension_fully_exempt,test_d7_al_or_fit_deduction,test_conversion_on_cap_al_la_ok_sc,test_al_per_spouse_conversion_and_db,test_al,test_al_dependent_tier,test_legacy_request_equals_v2,test_equal_ages_split_matches_legacy_split,test_al_split_one_qualifies,test_s_states,test_engine_paths,test_prop_p1. - Structural tests covering every state: 8.
- State forms and worksheets followed in the test derivations: Form 40 booklet (federal income tax worksheet); Schedule RS lines 9-10; Form 40 line 11b standard deduction chart and line 14 dependent chart on line 10 (engine 1.8.0; backend/tests/formmap_fm1/al.inc).
Social Security
Social Security benefits are fully exempt: none of the federally taxable amount enters the state base.
API value:
socialSecurityRule: "exempt". The engine's input is the federally taxable amount; income tests use the sum of the income components as the adjusted-gross-income proxy.