Alabama Paycheck Calculator (2026)

Alabama's income tax looks graduated on paper, with 2%, 4% and 5% brackets, but the top rate kicks in at just $3,000 of taxable income for a single filer ($6,000 for a couple). In practice almost every full-time worker pays 5% on nearly all of their wages. Two things soften that. Alabama is one of the few states that still lets you deduct the federal income tax you paid from your state taxable income, and the calculator on this page does not model that deduction, so the state figure above is a ceiling rather than a floor. The standard deduction is also unusually small, $2,500 for a single filer once income passes roughly $35,000, with a $1,500 personal exemption on top.

Several Alabama cities collect an occupational tax straight out of paychecks for anyone who works inside city limits, regardless of where they live. Birmingham, Bessemer and Auburn each take 1%, and Gadsden takes 2%. If you work downtown in Birmingham, expect an extra 1% withheld that this estimate does not include. There are no reciprocity agreements with neighboring states, so a Georgia or Tennessee resident commuting into Alabama files a nonresident Alabama return.

Alabama's popular exemption for overtime pay ended on June 30, 2025, so overtime earned in 2026 is fully taxable again. The state makes up for its low property taxes (the lowest in the country) with a 4% state sales tax plus local add-ons that push many cities past 9%, although the state portion on groceries dropped to 2% on September 1, 2025.