Alabama Cost of Living and Taxes
State and Individual Income Tax: | ||
| State Sales Tax4% City Sales Tax4% County Sales Tax 1% | Married/File Joint First $1,000 - 2% First $1,000 - 2% Next $5,000 - 4% Over $6,000 - 5% | Single/Head Household First $500 - 2% Next $2,500 - 4% Over $3,000 - 5% |
Answers to frequently asked questions: https://myalabamataxes.alabama.gov/webfiles/help/index.html#faq.
Ad Valorem - Residential property is taxed at a rate of 33 mills x 10 precent of assessed value. There is a homestead exemption for totally disabled persons or persons over 65 years of age with $7,500 or less income if they live on the property. Other exemptions are based on individual situations. Income from specified Alabama Retirement Systems, the United States Civil Service Retirement System, Military Retirement Systems and benefits received under a "defined benefit plan," as defined under Section 414(j) of the Internal Revenue Code, are exempt from Alabama income tax.
Alabama Cost of Living And Taxes:
How far your retirement money can go is dependent on two things, the local cost of living, which normally does not address taxes, and state and local taxes. This site provides information and links to assist in your retirement location decision making process.
In 2020, Alabama ranked 42nd in a ranking of states by "State Tax Collections Per Capita." Alabama's tax burden as a percentage of income was 8.7 percent, as opposed to the U.S. average of 9.9 percent. Alabama tax burden per capita was $2,397 as compared to the U.S. average of $3,217. Source: https://taxfoundation.org/?s=how+does+your+state+compare.
A net pay calculator allows you to calculate taxes on income and compare to other locations. Visit www.paycheckcity.com/calculator.
Cost of living comparator allows quick cost of living comparisons between communities; four links are provided:
- Bankrate Cost of Living Comparison(uses current ACCRA data)
- Relocation Essentials Cost of Living Comparison
- CNN Money Cost of Living Comparison
Taxes:
State and local taxes are a significant factor in selecting a location for living, a business or retirement. Alabama is consistently ranked low for state and local tax burdens. A ranking of states can be found at https://taxfoundation.org/?s=how+does+your+state+compare.
The Alabama Department of Revenue website provides information on state income tax, other state and local taxes. Visit www.revenue.alabama.gov.
Property Taxes:
Ad Valorem - Residential property is taxed at a rate of 10 percent of assessed value. There is a homestead exemption for totally disabled persons or persons over 65 years of age with $7,500 or less income if they live on the property. Other exemptions are based on individual situations. Income from specified Alabama Retirement Systems, the United States Civil Service Retirement System, Military Retirement Systems and benefits received under a "defined benefit plan," as defined under Section 414(j) of the Internal Revenue Code, are exempt from Alabama income tax. For more information, visit www.revenue.alabama.gov/property-tax/property-tax-assessment.
Houston County collects 34.5 mills on property within a municipality and 29.5 mills for property in the rural area of Houston County. For more information on Houston County millage rate, visit https://revenue.houstoncountyal.gov/Quick-Links/Millage-Rate. The property tax rates for all counties can be accessed at www.revenue.alabama.gov/property-tax/county-offices-appraisal-assessment-records.
Homeowners can claim a homestead exemption at the Houston County Revenue Commissioner's office located at 462 N. Oats St., Fifth Floor, Dothan, AL 36303. For additional information on homestead exemptions, maps of parcels in Houston County and other tax questions, call (334) 677-4717 or visit www.houstoncounty.org.
Sales Taxes:
State sales tax is 4 percent; prescription drugs exempt. The rate can go as high as 12 percent depending on city and county taxes. The state administers over 200 different city and county sales taxes; however, it does not administer all county or city sales taxes. To view city or county sales, use, lodging or rental taxes go towww.revenue.alabama.gov/salestax/sales/.
Alabama Estate and Inhertance Tax:
Alabama has no inheritance tax (Source: www.revenue.alabama.gov/individual-corporate/alabama-estate-and-inheritance-tax).
“Federal legislation passed in 2001 authorizes the elimination of the federal estate and gift tax by 2009. Alabama´s filing requirement is based on the federal estate tax credit allowed under the federal estate tax law. As a result of the federal tax changes enacted in 2001, estates where the decedent´s date of death is after Dec. 31, 2004 are not required to file with Alabama.”
